TRANSPORTATION

LAW

Week 1: Page 1-36

I. Chapter 1: General Considerations
1. Definition
There is a contract of transportation when a person obligates himself to transport persons or
property from one place to another for a consideration.

2. Parties
a. Carriage of Passengers
The parties are the common carrier and the passenger.

b. Carriage of Goods
The parties are the shipper and the carrier. Shipper is the one who delivers to goods to
carrier for transportation, is the one who pays the consideration or on whose behalf the
payment is made.

Consignee is the one to whom the goods are to be delivered.

GR: Only parties are bound by the contract
XPN: When Consignee is bound
A) Agency
B) Acceptance of bill of lading
C) Availment of the stipulation of pour autrui

3. Perfection
There are two types of contact of carriage.
1. Contract to carry: to carry passengers at some future date. This contract is consensual
and is perfected by mere consent.

2. Contract of carriage or of common carriage itself: should be considered real contract for
not until the facilities of the carrier are actually used can the carrier be said to have
already assumed the obligation of the carrier.
• Written contract is not necessary for the perfection of the contract of carriage

a. Aircraft
There is a perfected contract even of no tickets have been issued to passengers as long as
there was already a meeting of minds with respect to subject matter and consideration.

If it can be established that the passenger had checked in at the departure counter, passed
through customs and immigration, boarded the shuttle bus and proceeded to the ramp of
the aircraft and his baggage had already been loaded to the aircraft.



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 b. Buses, Jeepneys and Street Cars
Once a public utility stops, it is in effect making a continuing offer to bus riders (Continuing
offer rule).

It follows that the passenger is deemed to be accepting the offer if he is already attempting
to board the conveyances and the contract of carriage is perfected from that point.

c. Trains
a) Purchase a ticket
b) At the proper place and proper manner
c) Bonafide intention to use facilities

4. Common Carrier
Article 1732: Common Carriers are persons, corporations, firms or association engaged in the
business of carrying or transporting passengers or goods, or both, by land, water, or air for
compensation offering their services to the public.

They are presumed negligent hence must proved that they exercised extraordinary diligence.

One that holds itself out as ready to engage in the transportation of goods for hire as a public
employment and not as a casual occupation.

a. Public Service
The concept of common carrier coincides with notion of Public Service under the Public
Service Act that at least partially supplements the law on common carriers set forth in the
Civil Code.

Section 13(b) of Public Service Act:
(b) The term "public service" includes every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent,
occasional or accidental, and done for general business purposes, any common carrier, railroad, street
railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without
fixed route and whether may be its classification, freight or carrier service of any class, express service,
steamboat or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers
or freight or both, shipyard, marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system, gas, electric light, heat and power water supply and power,
petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting
stations and other similar public services

5. Test
In the case of First Phil Industrial Co v CA, the test for determining whether a party is a common
carrier of goods:
1. He must be engaged in the business of carrying goods for others as a public employment, and
must hold himself out as ready to engage in the transportation of goods for person generally as a
business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and over his
established roads; and

TRANSPO.AB17511.SY19-20 2

 4. The transportation must be for hire.

6. Characteristics
1. Article 1732 makes no distinction between one whose principal business activity is the
carrying of persons or goods or both and one who does such carrying only as an ancillary
activity (sideline)

2. Article 1732 also avoids making any distinction between a person or enterprise offering
transportation sevice on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis.

3. Article 1732 does not distinguish between a carrier offering its services to the general public,
the general community or population and one who offers services or solicits business only
from a narrow segment of the general population.

4. A person or entity os a common carrier and has the obligations of the common carrier under
the Civil Code even if he did not secure a Certificate of Public Convenience.

5. The Civil Code makes no distinction as to the means of transporting as long as it is by land,
water or air.

6. The Civil Code does not provide that the transportation should be by motor vehicle.

7. A person or entity may be a common carrier even if he has fixed snd publicly known route,
maintains no terminals and issues no tickets.

8. A person or entity need not be engaged in the business of public transportation for the
provisions of the Civil Code on common carriers to apply to them.

9. The carrier can also be a common carrier even if the operator does not own the vehicle or
vessel that he or she operates.

a. Broader Concept
The characteristics indicate an expanding concept of common carriers the case of First Phil
Industrial Co v CA, the test for determining whether a party is a common carrier of goods:

b. Ancillary Business
Article 1732 makes no distinction between one whose principal business activity is the carrying of
personsor goods or both and one who does such carrying only as an ancillary activity (sideline).
Hence in the case of De Guzman v CA, Cendana was held to be a common carrier although his
principal business was a junk dealer

c. Limited Clientele
In spouses Perena v sps. Nicolas the court held that the school bus is a common carrier because
despite catering to a limited clientele, the petitioners held themselves out as a ready

TRANSPO.AB17511.SY19-20 3

 transportation indiscriminately to the students of a particular school living within or near where
they operated the service and for a fee.

d. Means of Transportation
In First Philippine Industrial Corp v CA, pipeline operators are common carriers. The Civil Code
makes no distinction as to the means of transporting as long as it is by land, water or air. It does
not provide that the transportation be by motor vehicle.

e. Not Common Carrier by Law
Section 7 of RA 10668, foreign vessels engaging in carriage conducted in accordance with the said
law shall not be considered common carriers under the NCC, they are also not offering a public
service and thus shall fall outside the coverage of RA 9295 or the Domestic Shipping Devt Act of
2004.

7. Effect of Charter Party
A charter party may transform a common carrier into a private carrier. However it must be a
bareboat or demise charter where the charterer means the vessel with his own people and
becomes in effect.

The common carrier is not transformed into a private carrier if the charter party is a contact of
affreightment like a voyage charter ot a time charter

In voyage charter, the carrier is responsible to the goods received for transportation.

Charter party is defined as a contract by which an entire ship or some principal part thereof is let
by the owner to another person for a specified time or use.

Two types:
1. Contract of affreightment: involves use of shipping space on vessels leased by the owner in
part or as a whole to carry goods for others.
a. Time charter: the vessel is leased to the charterer for a fixed period of time

b. Voyage charter: the ship is leased to the single voyage.

2. Charter by demise or bareboat charter, the whole vessel is let to the charterer with a transfer
to him of its entire command and possession and consequent control over its navigation,
including the master and the crew, who are his servants.

8. Common Carrier Distinguished from Private Carrier
The distinction lies in the character of the business such that if the undertaking is a single
transaction not a part of general business or occupation, although involving the carriage of the
goods for a fee, the person or corporation offering such service is a private carrier.

Example: If a person agrees to carry a person to the airport using privately his owned car that is
meant for personal use and is considered a private carrier.

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In the case of Sps. Perena v Sps. Nicolas:
A carrier is a person or corporation who undertakes to transport or convey goods or persons from
one place to another, gratuitously or for hire. The carrier is classified either as a private/special
carrier or as a common/public carrier.10 A private carrier is one who, without making the activity
a vocation, or without holding himself or itself out to the public as ready to act for all who may
desire his or its services, undertakes, by special agreement in a particular instance only, to
transport goods or persons from one place to another either gratuitously or for hire.11 The
provisions on ordinary contracts of the Civil Code govern the contract of private carriage. The
diligence required of a private carrier is only ordinary, that is, the diligence of a good father of the
family.

In contrast, a common carrier is a person, corporation, firm or association engaged in the business
of carrying or transporting passengers or goods or both, by land, water, or air, for compensation,
offering such services to the public. Contracts of common carriage are governed by the provisions
on common carriers of the Civil Code, the Public Service Act, and other special laws relating to
transportation. A common carrier is required to observe extraordinary diligence, and is presumed
to be at fault or to have acted negligently in case of the loss of the effects of passengers, or the
death or injuries to passengers.

9. Common Carrier Distinguished from other contracts
a. Distinguished from towage
In towage, one vessel is hired to bring another vessel to another place. Diligence of a good
father of a family is required.

b. Distinguished from arrastre
Arrastre, refers to hauling of cargo, comprehends the handling of cargo on the wharf or
between the establishment of the consignee or shipper and the ship’s tackle. The
responsibility of the arrastre lasts until the delivery of the cargo to the consignee.

Functions:
1. Receive, handle, care for and deliver all merchandise imported and exported upon or
passing over government owned wharves and piers in the port
2. To record or check all the merchandise which may be delivered to said port at shipside
3. To furnish light and water services and other incidental services in order to undertake
its arrastre services

Hence the functions of the arrastre operator have nothing to do with the trade and business
of navigation nor the use or operation of vessels.

c. Distinguished from stevedoring
In stevedoring, the stevedores are involved in the loading and unloading of coastwise
vessels calling at the port. It refers to the handling of cargo in the holds of the vessel or
between the ship’s tackle and the holds of the vessel. Their responsibility ends upon the
loading and stowing of the cargo in the vessel.

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Diligence required is diligence of a good father of a family. It is not a common carrier as it
does not transport goods or passengers.

d. Distinguished from travel agency
A travel agency is not a common carrier. The contractual relation (is contract of service and
not contract of carriage) is only the agency’s service of arranging and facilitating the
booking, ticketing and accommodation in a package tour while in common carrier it is the
transportation. Diligence of a good father of a family is required. However the agency and
the carrier may be made jointly and severally liable.

10. Tramp Service and Line Service
11.
Cargo operation may be classified into two: Tramp Service and Liner Service.

"Liner Service" shall mean the operation of a common carrier which publicly offers its services without
discrimination to any user, has regular ports of call/destination, fixed sailing schedules and frequencies
and published freight rates and attendant charges and usually carries multiple consignments. They carry
general cargoes, meaning what is offered is accepted for shipment.

"Tramp Service" shall mean the operation of a contract carrier which has no regular and fixed routes
and schedules but accepts cargo wherever and whenever the shipper desires, is hired on a contractual
basis, or chartered by any one or few shippers under mutually agreed terms and usually carries bulk or
break bulk cargoes; and Tramp Service offers their capacity for carriage of bulk cargoes as desired by the
shipper who ordinarily engages the whole ship. Hence, each voyage is a matter of special arrangement
between the shipowner and the shipper

RA 9515 refers to an entity engage in Line Service as a common carrier, an entity that provides Tramp
Service is only referred as a contract carrier. Nevertheless, those engaged in Tramp Service may also be
considered common carriers depending on the circumstances.


Week 2: Page 36-75

12. Governing Laws
Article 1766 of the Civil Code expresses primacy of NCC.

Article 1766. In all matters not regulated by this Code, the rights and obligations of common carriers
shall be governed by the Code of Commerce and by special laws.

Article 1753. The law of the country to which the goods are to be transported shall govern the liability of
the common carrier for their loss, destruction or deterioration.

Treaties are also part of the law of the land.

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International Air transportation means the place of departure and the place of destination are within the
territories of two contracting countries regardless of whether or not there was a break in the
transportation or transhipment.

a. Summary of Rules
1. Coastwise Shipping
a. NCC (Art 1732-1766)-primary law
b. Code of Commerce- suppletory
2. Carriage from foreign ports to Philippine ports
a. New Civil Code- primary law
b. Code of Commerce- suppletory
c. Carriage of Goods by Sea Act- suppletory
3. Carriage from Philippine ports to foreign ports
a. Art 1753: The law of the country to which it is to be transported
4. Overland Transportation
a. NCC-primary
b. Code of Commerce- suppletory
5. Air Tranportation
a. NCC
b. Code of Commerce
c. For International Carriage- Convention for the unification of Certain Rules Relating to the
International Carriage by Air or “Warsaw Convention” with its amendments.

13. Nature of Business
Common Carriers exercise a sort of public office and have duties to perform in which the public is
interested. They are public utilities, they cater to the needs of the public and conduce to their
comfort and convenience. Hence they are required to exercise extraordinary diligence in the
performance of their obligation.

14. Registered Owner Rule and Kabit System
In certain cases, it is not only the operator of the vehicle who may be held liable but by reason of public
policy, the law allows the victim to sue third parties.
a. Registration Laws
Registration of Motor vehicles is governed by RA 4136 otherwise known as “The Land
Transportation and Traffic Code.”


Section 5. Compulsory Registration of Motor Vehicles
a) All vehicles must be registered with the Bureau of Land Transportation for the current year
b) The dates of annual registration of motor vehicles shall be based on a registration scheme to be
prepared by the Bureau. Any registration not renewed on or before the fixed date shall become
delinquent and invalid.
c) Dealer’s Report- dealers shall submit to the Director of LTO a report concerning the sale or transfer
of motor vehicles.
d) Unauthorized repair of change of engine serial number- not allowed unless satisfactorily explained
to and approved by Director of LTO

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 e) Encumbrances of Motor Vehicles- in order to be valid must against third persons must be recorded
in the bureau. Even if it is cancellation of foreclosure it must be recorded.

Section 14. Issuance of Certificate of Registration
Certificate of Registration must be issued after due inspection and payment of registration fees.

Section 15. Use and Authority of certificate of registration
a) The certificate must be carried as evidence of registration and be presented for re registration,
transfer ownership or recording of encumbrances. (original or photocopy)
b) The Certificate be the authority for the operation of the motor vehicle
c) No motor vehicle shall be operated which would place it under a classification requiring larger
registration fee than the certificate of registration.

Section 16. Suspension of registration certificate
If motor vehicle is found to be unfit then it might be suspended by the Commissioner, and should notify
the owner of actions taken by him.

Section 17. Number plates, preparation and issuance thereof.
Permanently assigned to motor vehicle during its lifetime and be issued under reasonable fee. No MV is
exempted. Plate color is different to distinguish private from public and that sticker indicating its year of
registration must be issued.

Section 18. Use of number plates
One in front and on in the rear. No person shall transfer number plates from one vehicle to another.

b. Registered Owner Rule
The rule is that the person who is the registered owner of a vehicle is liable for any damaged caused to
thee injured party even if it is hold already subject to his recourse against the buyer.

The main aim of motor vehicle registration is to have someone responsible when accident occurs.

a. The registered owner is not liable if the vehicle was taken from his garage without his
knowledge and consent.

b. The registered owner cannot escape liability resulting from the use if the registered owner’s
vehicle unless there is unauthorized use or theft of the vehicle.

c. The registered owner rule applied even if the registered owner leased the vehicle to another
who is the actual operator. To be free from liability, the owner should register the lease
contract with the LTO

d. The registered owner rule applies in a financial lease. A financial lease is a mode of extending
credit through a non-cancellable lease contract under which the lessor purchases at the
instance of the lessee in which the latter has right to use but with no obligation to purchase the
leased property from the owner-lessor.

e. If the registered owner is made liable despite the transfer of the vehicle, he has the right to be
reimbursed by the transferee. (Third Party complaint)

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f. SC: for better protection of the public that both the owner and actual operator should be
adjudged jointly and severally liable with the driver.

c. Kabit System
It is an arrangement whereby a person who has been granted a certificate of public convenience allows
other persons who won motor vehicles to operate them under his license, sometimes for fee or
percentage of the earnings. It is contrary to public policy and therefore void and inexistent under Art
1409 of the NCC.

a. The primary factor in granting certificate of public convenience is the financial capacity, the kabit
system renders it illusory because the grantee may easily escape civil liability.

b. The law in enjoining the kabit system is to identify the person who is responsible in case of
accident and not so much to penalize the parties.

d. Pari Delicto Rule
Persons who are party to Kabit system cannot invoke the same as against each other as either to enforce
their illegal agreement or to invoke the same to escape liability. No action arises from an illegal bargain.
Having entered into an illegal contract, each must bear the consequences of his acts.

e. Land Transportation Rules
LTFRB imposes similar rule on registered owner rule and prohibits Kabit System and the following are
conditions for the issuance of a Certificate of Public Convenience:
1. The PUV operator shall not allow any motor vehicle belonging to others to be registered and/
or operated under the certificate of public convenience granted.
2. The PUV operator shall not allow any illegal transfer of motor vehicle plates (kambal plaka)
3. The PUV operator shall not allow illegal use or transfer of chassis/ engine motor (pukpok
chassis)

f. Aircrafts and Vessels
The rule that prohibits the Kabit systmen may also be applied to vessels and aircrafts. To operate as
common carrier one must obtain a certificate of public convenience. No one can circumvent the law by
using another’s certificate and have it transferred without the permission of the government agency.

With respect to Aircrafts: Section 44 of RA 9497 Civil Aviation Authority Act of 2008 provides that the
certificate of registration is conclusive evidence of ownership except when ownership itself is the issue.
15. Boundary System
The carrier cannot escape liability by claiming that he is only a lessor that the driver is a lessee. (The
measure of their earnings depend on number of trips)

II. Chapter 2: Obligations of the Common Carrier
1. Basic Obligations of the Carrier
The most basic obligation is to transport the goods/ passenger safely to the agreed destination.

The duties of common carrier are:
a. To accept passengers and goods without discrimination
b. To seasonably deliver the goods or bring the the passenger to the destination

TRANSPO.AB17511.SY19-20 9

 c. To deliver the goods or bring the passenger to the proper place/ destination
d. To deliver the goods to the proper person
e. To exercise extraordinary diligence in the performance of its duties.

A passenger or shipper has a right:
a. Against discrimination
b. Have his goods to be transported without delay
c. To enforce all obligations of the carrier

2. Duty to Accept Goods for Transport
Common carriers cannot lawfully decline to accept particular class of goods for carriage unless it
appears that there is justifiable reason to do so. The law is legal as it does not impose nor force, it
sets it only when the carrier decides to serve the public.

A. Present Rule: Disallows discrimination. LTFRB requires a common carrier to avoid undue
preferences or unjust discrimination in his service before it may be issued a franchise.

a. Valid Grounds for non- acceptance
i. When goods are dangerous objects or substances including dynamite and other explosives
ii. Goods are unfit for transportation
iii. Acceptance would result in overloading
iv. The goods are considered contrabands or illegal goods
v. Goods are injurious to health
vi. Goods will be expose to untoward danger like flood, capture by enemies and the like
vii. Goods like livestock will be exposed to diseases
viii. Strike and
ix. Failure to tender goods on time

• Carriers may be granted to carry goods that are dangerous and hazardous provided it was authorized
by Maritime Industry Authority (MARINA), clearance from government agency such as Environmental
Management Bureau and others.
• Carriers may refuse to accept goods unfit for transportation or unfit because of improper packaging
or defect in their containers, but carrier may choose to transport and limit its liability by stipulation.

Code of Commerce Art 356: Carriers may refuse to accept packages which appear unfit for
transportation; and if said transportation is to be made over a railroad, and the shipment is insisted
on, the company shall carry it, being exempt from all liability if its objections are so stated in the bill of
lading.

• Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or of the containers, the common carrier
must exercise due diligence to forestall or lessen the loss.

• Carrier has no obligation to inquire into the correctness of information of the goods. The duty to
conduct inspection arises in event when there is reason to doubt veracity of representation

TRANSPO.AB17511.SY19-20 10


Code of Commerce Art 357: If the carrier by reason of well-founded suspicions as to the correctness
of the declaration of the contents of a package should determine to examine it, he shall do so before
witnesses, in the presence of the shipper or of the consignee.

Should the shipper or consignee to be cited not appear, the examination shall be made before a
notary, who shall draft a certificate of the result of the examination, for the proper purposes.

If the declaration of the shipper should be correct, the expenses caused by the examination and those
of carefully repacking the packages shall be defrayed by the carrier, and in a contrary case by the
shipper.

• Transportation of Animals. RA 8485 as amended by RA 10631 otherwise known as The Animal
Welfare Act of 1998 purpose is to protect and promote the welfare of all kinds of animals. The
common carrier shall not abandon the animal without valid reason or it will constitute as
maltreatment which is punishable by imprisonment or fine.

Section 4. It shall be the duty of any owner or operator of any land, air or water public utility transporting
pet, wildlife and all other animals to provide in all cases adequate, clean and sanitary facilities for the safe
conveyance and delivery thereof to their consignee at the place of consignment. They shall provide sufficient
food and water for such animals while in transit for more than twelve (12) hours or whenever necessary.

No public utility shall transport any such animal without a written permit from the Director of the Bureau of
Animal Industry or his/her authorized representative. No cruel confinement or restraint shall be made on
such animals while being transported.

Any form of cruelty shall be penalized even if the transporter has obtained a permit from the Bureau of
Animal Industry. Cruelty in transporting includes overcrowding, placing of animals in the trunks or under
the hood trunks of the vehicles.

b. Duties to special classes of passengers
Carriers are mandated to esure that PWDs and senior citizens shall have equal access to air
transportation services.
i. PWD
SECTION 26. Mobility- The State promote the mobility of disabled persons. Disabled persons
shall be allowed to drive motor vehicles, subject to the rules and regulations issued by the
Land Transportation Office pertinent to the nature of their disability and the appropriate
adaptations or modifications made on such vehicles.

SECTION 27. Access to Public Transport Facilities The Department of Social Welfare and
Development shall develop a program to assist marginalized disabled persons gain access in
the use of public transport facilities. Such assistance may be in the form of subsidized
transportation fare.

The said department shall also allocate such funds as may be necessary for the effective
implementation of the public transport program for the disabled persons.

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 The Accessibility Law, as amended, shall be made supplementary to this Act.

SECTION 34. Public Transportation It shall be considered discrimination for the
franchises or operators and personnel of sea, land, and air transportation facilities to charge
higher fare or to refuse to convey a passenger, his orthopedic devices, personal effects, and
merchandise by reason of his disability.

ii. Senior Citizens Act
20% discount to transportation services and DOTC must develop a program to assist senior
citizens to fully gain access in the use of public transport facilities.

3. Duty to Make Timely Delivery of the Goods
The carrier is duty bound to deluver the goods within the time agreed upon to the designated consignee.

a. Agreement as to time: The goods must be delivered within the stipulated time. The rule is
when the law creates a duty and the party is disabled from performing it without any default
then the law will excuse him but not if he is the one who provided it.

Article 358: Should no period within which goods are to be delivered be previously fixed, the
carrier shall be under the obligation to forward them in the first shipment of the same or similar
merchandise which he may make to the point of delivery; and should he not do so, the damages
occasioned by the delay shall be suffered by him.

b. Reasonable time: In the absence of a special contract, a carrier is not an insurer against delay in
the transportation of goods. Reasonable may also depend upon the nature of the goods.

I. Consequences of Delay
Excusable delays in carriage suspend but do not generally terminate the contract of carriage and when
the cause is removed the master must proceed with the voyage and make the delivery.

• If delay is inexcusable, the carrier is liable:
o Even if natural disaster caused the damage
o The stipulation limiting liability is inoperative
o Liable for damages caused by delay
o Consignee may exercise his right to abandon under Art 371 of Code of Commerce

a) New Civil Code provisions:
Article 1740. If the common carrier negligently incurs in delay in transporting the goods, a
natural disaster shall not free such carrier from responsibility.

Article 1747. If the common carrier, without just cause, delays the transportation of the goods or
changes the stipulated or usual route, the contract limiting the common carrier's liability cannot
be availed of in case of the loss, destruction, or deterioration of the goods.

b) Code of Commerce provisions on delay:

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Article 370 If a period has been fixed for the delivery of the goods, it must be made within the same, and
otherwise the carrier shall pay the indemnity agreed upon in the bill of lading, neither the shipper nor
consignee being entitled to anything else.

Should no indemnity have been agreed upon and the delay exceeds the time fixed in the bill of lading, the
carrier shall be liable for the damages which may have been caused by the delay.

Article 371 In cases of delay on account of the fault of the carrier, referred to in the foregoing articles, the
consignee may leave the goods transported on the hands of the carrier, informing him thereof in writing
before the arrival of the same at the point of destination.
When this abandonment occurs, the carrier shall satisfy the total value of the goods, as if they had been lost
or mislaid.

Should the abandonment not occur the indemnity for loss and damages on account of the delays can not
exceed the current price of the goods transported on the day and at the place where the delivery was to have
been made. The same provision shall be observed in all cases where this indemnity is due.

Article 372 The appraisement of the goods which the carrier must pay in case of their being lost or mislaid
shall be fixed in accordance with what is stated in the bill of lading, no proofs being allowed on the part of
the shipper that there were among the goods declared therein articles of greater value, and money.

Horses, vehicles, vessels, equipment, and all the other principal and accessory means of transportation, shall
be especially obligated in favor of the shipper, although with relation to railroads said obligation shall be
subordinated to the provisions of the laws of concession with regard to property and to those of this Code
with regard to the manner and form of making attachments and retentions against the said companies.

Article 373 A carrier who delivers merchandise to a consignee by virtue of agreements or combined services
with other carriers shall assume the obligations of the carriers who preceded him, reserving his right to
proceed against the latter if he should not be directly responsible for the fault which gives rise to the claim of
the shipper or of the consignee.

The carrier making the delivery shall also assume all the actions and rights of those who may have preceded
him in the transportation.
The sender and the consignee shall have an immediate right of action against the carrier who executed the
transportation contract, or against the other carriers who received the goods transported without reserve.

The reservations made by the latter shall not exempt them, however, from the liabilities they may have
incurred by reason of their own acts.

Article 374 The consignees to whom the remittance may have been made can not defer the payment of the
expenses and transportation charges on the goods that they received after twenty-four hours have elapsed
from the time of the delivery; and in case of delay in making this payment, the carrier may request the
judicial sale of the goods he transported to a sufficient amount to cover the transportation charges and the
expenses incurred.

c) Right to abandon: Article 371 of Code of Commerce provides that in cases of delay on account of
the carrier, the consignee may leave the goods transported in the hands of the carrier informing
him via writing before it arrives at point of detination. Carrier is liable for the total value. The
refusal to accept would not be valid if the conditions are not present.
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The shipper can abandon in marine transportation. Rule may also be made by virtue if stipulation
or agreement between the parties.

4. Place of Delivery
The goods must delivered in the place agreed upon by the parties.
Article 360 The shipper may, without changing the place where the delivery is to be made, change the
consignment of the goods delivered to the carrier, and the latter shall comply with his orders, provided
that at the time of making the change of the consignee the bill of lading subscribed by the carrier be
returned to him, if one were issued, exchanging it for another containing the novation of the contract. The
expenses arising from the change of consignment shall be defrayed by the shipper.

• If a bill of lading was issued, these are the rules:
Article 712 The captain can not himself change the destination of merchandise. In admitting this
change at the instance of the freighter, he must first take up the bills of lading he may have issued,
under the penalty of being liable for the cargo to the legitimate holder of the same.

Article 713 If before delivering the cargo a new bill of lading should be demanded of the captain, it
being alleged that the previous ones are not presented on account of their loss or for any other
sufficient cause, he shall be obliged to issue it, provided security for the value of the cargo is given to
his satisfaction; but without changing the consignment and stating therein the circumstances
prescribed in the last paragraph of Article 707, when the bills of lading referred to therein are in
question, under the penalty otherwise to be liable for said cargo if not properly delivered through his
fault.

5. To Whom Delivered
The goods should be delivered to the consignee or any other person to whom the bill of lading was
validly transferred or negotiated. Delivery must generally be made to the owner or consignee or to
someone lawfully authorized by him to receive the goods for his account.

Article 368 The carrier must deliver to the consignee without any delay or difficulty the merchandise
received by him, by reason of the mere fact of being designated in the bill of lading to receive it; and
should said carrier not do so he shall be liable for the damages which may arise therefrom.

Article 369 Should the consignee be not found at the domicile indicated in the bill of lading, or should
refuse to pay the transportation charges and expenses, or to receive the goods, the deposit of said goods
shall be ordered by the municipal judge, where there is no judge of first instance, to be placed at the
disposal of the shipper or sender, without prejudice to a person having a better right, this deposit having
all the effects of a delivery.

• Conflict between consignee and the shipper: The right of the shipper to countermand the shipment
terminates when the consignee or legitimate holder of the bill of lading appears with such bill before
the carrier and makes himself a party to the contract. Prior that time, he is a stranger to the contract.

• If a contract is in favour of third person, he may demand its fulfilment provided he communicated its
acceptance before its revocation.

TRANSPO.AB17511.SY19-20 14

• Effect of Negotiable Bill of Lading. The carrier is obligated to deliver the goods to the holder and such
right is acquired from the time of negotiation.

• There must be notice to the consignee of the arrival of the goods and must be given reasonable time to
remove the cargo. The holder must present his lading with the captain or if he fails to do so, the
captain may unload it and place it in deposit to which must be paid by the holder.

6. Delay to Transport Passengers
The carrier is liable for any loss or damage including any pecuniary loss or loss of profit which the
passenger may have suffered by reason of delay.

Article 698 In case a voyage already begun should be interrupted the passengers shall be obliged only to
pay the passage in proportion to the distance covered, and shall not be entitled to recover for losses and
damages if the interruption is due to an accidental cause or to force majeure, but have a right to
indemnity if the interruption should have been caused by the captain exclusively. If the interruption
should be by reason of the disability of the vessel, and the passenger should agree to await her repair, he
can not be required to pay any increased price of passage, but his living expenses during the delay shall
be for his own account.
• The carrier will not be liable if it was the decision of the passenger to disembark and thus was not
able to attend his meeting on time.

• MARINA Regulation: In case the vessel is not able to depart on time and the delay is unreasonable, the
passenger may opt to have his/her ticket immediately refunded without any refund fee from the
ticketing office.

• Effects of delayed and unfinished voyage:
3.1 In case the vessel can not continue or complete her voyage for any cause, the carrier is under
obligation to transport the passenger to his/her destination at the expense of the carrier
including free meals and lodging before the said passenger is transported to his/her
destination. A passenger may opt to have his/her ticket refunded in full if the cause of the
unfinished voyage is due to the negligence of the carrier, or, to an amount that will suffice to
defray transportation cost at the shortest possible route towards his/her destination if the
cause of the unfinished voyage is a fortuitous event.

3.2 The carrier shall provide meals, free of charge, during meal time in case the vessel is delayed in
the arrival at the port of destination.

3.3 In case of delay in the departure at the port of origin due to the carrier’s negligence, the carrier
is also under obligation to provide meals, free of charge, during meal time to ticketed
passengers for the particular voyage. If the cause of the delay is a fortuitous event, the carrier
is under no obligation to serve free meals to the passengers.

3.4 The carrier is under obligation to duly inform the passengers of the change in sailing schedule
of the vessel(s).

• Air Transportation rules on delay in the transportation of airline passengers are provided under Bill
of Rights of Passengers embodied in DOTC-DTI Joint Administrative Order No.1 Series of 2012 and
CAB Economic Regulation No. 9.
TRANSPO.AB17511.SY19-20 15



Week 3: Page 75-180

7. Duty to Exercise Extraordinary Diligence
A common carrier must faithfully comply with his obligation to carry the goods and ferry the
passenger to the point of destination. He must do so in exercise of extraordinary diligence, failure to do so
would result in breach of obligation of the carrier through negligence. The duty to exercise extraordinary
diligence is provided in:

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and
1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in
Articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.
7.1 Code of Commerce Provisions


Article 363 With the exception of the cases prescribed in the second paragraph of Article 361, the carrier
shall be obliged to deliver the goods transported in the same condition in which, according to the bill of
lading, they were at the time of their receipt, without any detriment or impairment, and should he not do so,
he shall be obliged to pay the value of the goods not delivered at the point where they should have been and
at the time the delivery should have taken place.
If part of the goods transported should be delivered the consignee may refuse to receive them, when he
proves that he can not make use thereof without the others.
Article 364 If the effect of the damage referred to in Article 361 should be only a reduction in the value of
the goods, the obligation of the carrier shall be reduced to the payment of the amount of said reduction in
value, after appraisal by experts.
Article 365 If, on account of the damage, the goods are rendered useless for purposes of sale or consumption
in the use for which they are properly destined the consignee shall not be bound to receive them, and may
leave them on the hands of the carrier, demanding payment therefor at current market prices.
If among the goods damaged there should be some in good condition and without any defect whatsoever, the
foregoing provision shall be applicable with regard to the damaged ones, and the consignee shall receive
those which are sound, this separation being made by distinct and separate articles, no object being divided
for the purpose, unless the consignee proves the impossibility of conveniently making use thereof in this
form.
The same provision shall be applied to merchandise in bales or packages, with distinction of the packages
which appear sound.
7.2 Rationale

TRANSPO.AB17511.SY19-20 16

 Extraordinary diligence must be complied with because of the preciousness of human life and by
the consideration that every person must in every way be safeguarded against all injuries.

7.3 Meaning of Extraordinary Diligence
Must prove that it used all reasonable means to ascertain the nature and characteristics of the
goods tendered for transport and it exercised due care in handling them. A man must use his common
sense and exercise due reflection in all his acts, it his duty ti be careful, cautious, prudent if not from
instinct then through fear of recurring punishment.

7.4 Non Delegable Duty
The duty of seaworthiness, the duty of acre of the cargo is non delegable, and the carrier Is
accordingly responsible for the acts of the master, crew, stevedore and his other agents. In case a
consignee is required to assist in unloading does not relieve him of its duty.
The carrier can not escape liability even if the arrastre operator is doing the unloading of the
cargoes. The carrier may be held jointly liable with the arrastre operator if the latter’s negligence caused
damage to the goods.

7.5 Presumption of Negligence
In case of loss of effects or cargo or passengers or death or injuries to passengers, the common
carrier is presumed to be at fault or have acted negligently unless he had observed extraordinary
diligence in the vigilance thereof.

The court need not make an express finding of fault in the common carrier as long as it is shown
that: 1) there is a contract; 2) that loss, deterioration, took place during the contract.

Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods
are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as required in Article 1733.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault
or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in
Articles 1733 and 1755.
The carrier in order to rebut the presumption of negligence, show that they exercised
extraordinary diligence while the goods are in his possession. The plaintiff must also prove that actual
shortage happened before presumption of negligence can arise.
There is no presumption of bad faith even when there is presumption of negligence. Bad faith
should be established by clear and convincing evidence. Finding of bad faith is necessary before the court
can award moral, exemplary damages in breach of contract of carriage.
There is no presumption also that there is gross negligence on the part of the common carrier.
Gross negligence amounts to bad faith and may entitle the victim to moral and exemplary damages.
7.6 Effect of Acquittal
The acquittal of the employee of the common carrier in the criminal case is immaterial to the case
for breach of contract. Regardless of the conviction or acquittal in the separate criminal case, the same
has no bearing in the resolution of the case based on culpa contractual; there is no effect on the
presumption of the negligence in the breach of contract cases.
TRANSPO.AB17511.SY19-20 17


7.7 Duration of Duty in Carriage of Goods
Due diligence must be exercised the moment the goods are delivered to the carrier.

Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to
receive them, without prejudice to the provisions of Article 1738.
Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full force
and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has
made use of the right of stoppage in transitu.
Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the time
the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been
advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or
otherwise dispose of them.
a. When the goods are deemed delivered to the carrier: it is deemed delivered to the carrier
when the goods are ready for and have been placed in the exclusive possession, custody and
control of the carrier for the purpose of their immediate transportation and the carrier has
accepted them. When the carrier accepts them, the liability commences.
b. Temporary Unloading or Storage: the duty to observe extra ordinary diligence over the
goods remains in full force and effect even when they are temporarily unloaded or stored in
transit.
c. Stoppage in Transitu: By way of exception, extraordinary diligence need not be exercised
over the goods that are unloaded temporarily if the shipper or owner has made use of the right
of stoppage in transit. It is a right of an unpaid seller to resume possession of the goods at any
time while the goods are in transit and he will then become entitled to the goods as if he never
parted with the possession.
The right is available if:
i. The buyer becomes insolvent
ii. Unpaid seller parted with the possession of the goods
iii. The goods are still intransit

The duty to exercise extraordinary diligence ends if the seller has made use of his right of
stoppage in transit because it is in effect as if the contract of carriage is terminated.
d. Diligence up to Delivery. Until it is turned over to the consignee or his duly authorized agent
and reasonable time is given to remove the goods.
e. Delivery to Custom Authorities. The goods remain to be the responsibility of the carrier if
they are in the hands of the custom officials. The parties may agree to limit the liability of the
carrier considering that it has to go through custom officials before it is actually delivered to
consignee. The solution can also be is to stioulate in the bill of lading that the carrier shall not
be liable for any loss while the goods are in the custody of Bureau of Customs.

7.8 Commencement of Duty in Carriage of Passengers

TRANSPO.AB17511.SY19-20 18

 a. Train. Extraordinary responsibility of common carriers commence the moment when a person
purchase a ticket, presents him self at the proper place and proper time and has bonafide intention to
ride.

This duty is not only during the course of the trip but as long as the passenger is within its
premises of the common carrier.

b. Carriage by Sea. The duty of the carrier commences as soon as a person with bona fide
intention of taking passage places himself in the care of the carrier or its employees and is accepted as
passenger.

c. Land Transportation. (Jeep and Bus) They are duty bound to stop their conveyances for a
reasonable length of time in order to afford passengers an opportunity to board and enter. Once they
stop, they are making a continuous offer to bus riders. The duty will terminate until the passenger has
reached his destination and safely alighted from the carrier’s conveyance/ premise.

7.9 How Duty is Complied With
There is no hard and fast rule in the exercise of extraordinary diligence.
i. Diligence of a good father of a family is not enough.
ii. Statutory Duties to passengers
Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or
wilful acts of the former's employees, although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good
father of a family in the selection and supervision of their employees.
Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts
or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of
the diligence of a good father of a family could have prevented or stopped the act or omission.
7.10 Duty to Third Persons
The duty extends to the members of the crew such as clerk of a railroad company who rode a
train on his way home from work.

Duty to third person. If common carriers carefully observed the statutory standard of diligence in
respect of their own passengers they cannot help but also benefit pedestrians, owners or passengers of
other vehicles who are equally entitled to the safe and convenient use of roads and highways.

7.11 Effect of Stipulation on Extraordinary Diligence
Parties may voluntarily modify the duty of the carrier by expressly provision of their contract.
However, in certain instances, the stipulation may be considered invalid.

i. Goods. The parties cannot stipulate that the carrier will not exercise any diligence in the
custody of goods, or that it be at shipper’s risk. The may stipulate a lesser diligence than extraordinary.

Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence
shall be valid, provided it be:

TRANSPO.AB17511.SY19-20 19

(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
ii. Passengers. The utmost diligence cannot be dispensed with or lessened through stipulation or
posting of notices.
Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Articles 1733
and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on
tickets, or otherwise.
iii. Gratuitous Passenger. Common carrier are still required to exercise extraordinary
diligence even to passengers gratuitously or non paying passengers but they can limit the
liability.
Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for
negligence is valid, but not for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common carrier's liability.
8. Extraordinary Diligence in Carriage by Sea
Owed its conception from the nature of its business as it is impressed with public duty. This
standard favors the shipper who is at the mercy of the common carrier once the goods have been
entrusted to the latter for shipment.

8.1 Seaworthiness
For a vessel to be seaworthy, it must be equipped for the voyage and manned with sufficient
number of competent officers and crew. Failure to maintain it is a breach of its duty.

The ship that will transport the passenger and goods is seaworthy. The carriers are deemed to
warrant impliedly the seaworthiness of the ship.

a. Warranty of Seaworthiness of Ship. A passenger or a shipper is under no obligation to conduct
an inspection of the ship and its crew as the carrier by law is obliged to impliedly warrant its
seaworthiness.
b. Warranty under special law. Seaworthiness of the ship is impliedly warranted under the
Insurance Code of the Philippines.
Sec 3 (1) The carrier shall be bound before and at the beginning of the voyage to exercise due
diligence to— A. Make the ship seaworthy.
c. Domestic Shipping. Sec 9 of RA 9295 requires all vessels to be seaworthy at all times

SEC. 9. Safety Standards. - All vessels operate by domestic ship operators shall at all times be in
seaworthy condition properly equipped with adequate life-saving, communication, safety and other
equipment operated and maintained in accordance with the standards set by MARINA, and manned by
duly licensed and competent vessel crew.

The MARINA shall have the power to inspect vessels and all equipment on board to ensure compliance
with safety standards.

TRANSPO.AB17511.SY19-20 20

 d. No duty to inquire. Passengers and shippers presume that common carriers possess all the legal
requisites in its operation. To require passengers and shippers with regard to ship’s
seaworthiness and papers would be render our maritime law a futility.
e. Burden of proof. It is the carrier that carries such burden of proving that the ship is seaworthy.
Sufficient evidence must be submitted and presentation of certificate of seaworthiness is not
sufficient.

8.2 Meaning of Seaworthiness
Is that strength, durability and engineering skill made a part of a hip’s construction and continued
maintenance, together with a competent and sufficient crew, which would withstand the vicissitudes and
dangers of the elements which might reasonably be expected or encountered during her voyage without
oss or damage to her particular cargo.

a. Insurance Code:
Sec. 114. A ship is seaworthy when reasonably fit to perform the service and to encounter the ordinary perils
of the voyage contemplated by the parties to the policy.
Sec. 116. A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but
requires that it be properly laden, and provided with a competent master, a sufficient number of competent
officers and seamen, and the requisite appurtenances and equipment, such as ballasts, cables and anchors,
cordage and sails, food, water, fuel and lights, and other necessary or proper stores and implements for the
voyage.
Sec. 119. A ship which is seaworthy for the purpose of an insurance upon the ship may, nevertheless, by
reason of being unfitted to receive the cargo, be unseaworthy for the purpose of the insurance upon the
cargo.
b. COGSA:
Section 3. (1) The carrier shall be bound, before and at the beginning of the voyage, to exercise due
diligence to —

(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are
carried, fit and safe for their reception carriage and preservation.

(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods
carried.

c. A vessel must have degree of fitness having regard to all the circumstances, to withstand the rigors
of the voyage, fitness of the vessel to store the cargoes and accommodate passengers to be
transported and that it is adequately equipped and properly manned.
d. The length and nature of the voyage maybe considered so that a ship may be seaworthy for one
voyage and not so for another.
e. Fitness of the vessel itself. It is necessary that the vessel can be expected to meet the normal
hazards of the journey.

The duty to make the ship seaworthy, including the maintenance of the ship can be delegated.
However, the ship owner must exercise close supervision to its men.

TRANSPO.AB17511.SY19-20 21


8.3 Cargoworthiness
Means that the vessel must be sufficiently strong and equipped to carry the particular kind of
cargo that she has contracted to carry and her cargo must be so loaded that it is safe for her to proceed on
the voyage.

The ship must not only be seaworthy but must also be cargo worthy. Ship must be fit to carry the
cargo.

8.4 Proper Manning
For a vessel to be seaworthy, it must be adequately equipped and manned with sufficient number
of competent officers and crew.

The duty of the carrier is not complied with if the captain has no license, whose navigational skill
is questionable, has disabling want of skill or knowledge. It is not an excuse that the carrier cannot afford
the salaries of competent and licensed crew.

Article 609 Captains and masters of vessels must be Filipinos, having legal capacity to bind themselves in
accordance with this Code, and must prove that they have the skill, capacity, and qualifications required to
command and direct the vessel, as established by marine laws, ordinances, or regulations, or by those of
navigation, and that they are not disqualified according to the same for the discharge of the duties of that
position.
If the owner of a vessel desires to be the captain thereof and does not have the legal qualifications therefor,
he shall limit himself to the financial administration of the vessel, and shall intrust her navigation to a
person possessing the qualifications required by said ordinances and regulations.
8.5 Adequate Equipment
The Maritime Industry Authority prescribes rules that provide for indispensable equipment and
facilities. Thus, the rules include the requirement that there are adequate exit doors, lifeboats, life vests
and other similar items.

8.6 Overloading
Duty to exercise due diligence likewise includes the duty to take passengers or cargoes that are
within the carrying capacity of the vessel.

8.7 Proper Storage
The vessel itself may be suitable for the cargo but this is not enough because the cargo must also
be properly stored.

a. Deck Cargo. The SC pointed out that carrying a deck cargo raises the presumption of
unseaworthiness unless it is shown that it will not interfere with the proper management of the
ship.
The general rule is that carrier is to stow a cargo and not to place it in an exposed position
on the open deck. But parties may stipulate that the cargo is to be carried on deck at the
shipper’s risk.

There may be cases that cargo may be stored on deck depending on the nature of the cargo,
or that it cannot be accommodated or cannot fit into hold.

TRANSPO.AB17511.SY19-20 22

 b. Effect of Notation of Damage in the Bill of Lading. The carrier must still exercise extraordinary
diligence to avoid further loss or damage or they will still be liable.
c. Extraordinary diligence must include safeguarding the shipment from damage coming from
natural elements like rainfall. Thus, the carrier is liable if the goods were stored outside the
warehouse and sustained water damage because of rainfall.

8.8 Negligence of Captain and Crew
The common carrier must exercise due diligence in the supervision of the functions of its captain
and crew are performing their functions.

Limited Liability Rule applies to negligence of the captain and crew but it cannot be invoked when
the captain and crew are incompetent.

8.9 Rules on Passenger Safety
Negligence on the part of the captain and crew as well as the operator includes failure to comply
with the regulations issued by the Maritime Industry Authority(MARINA) on the safety of the passengers.

Memorandum Circular No 112 provides that carrier is bound to carry passengers safely as far as
human care and foresight can provide using utmost diligence of a very cautious person with regard for all
circumstances.

Memorandum Circular No114 provides for preventive safety measures that are required for all
ship owners and operators of passenger liner vessels.

8.10 Duty to take proper route
The carrier is obligated to follow the usual reasonable commercial or customary route. It may be
modified in many cases for navigational or other reasons.

a. Improper Deviation:
Article 359 If there should be an agreement between the shipper and the carrier with regard to the road
over which the transportation is to be made, the carrier can not change the route, unless obliged to do so by
force majeure; and should he do so without being forced to, he shall be liable for any damage which may be
suffered by the goods transported for any other cause whatsoever, besides being required to pay the amount
which may have been stipulated for such a case.
When on account of the said force majeure the carrier is obliged to take another route, causing an increase
in the transportation charges, he shall be reimbursed for said increase after presenting the formal proof
thereof.
b. If there is loss when carrier took a shortcut, he may be liable.
c. The routes of common carriers are now approved by the appropriate government agencies.
Carriers by sea are subject to approval of Maritime Industry Authority and it can not be changed
without authorization from the same.
d. Improper deviation may be a valid ground to deny a marine insurance claim under the Insurance
Code.
e. In airway bill, carrier assumes no obligation to carry the goods in a particular route or routes is
binding. (applies in weather turbulence, mechanical failure, national security)
f. There is no deviation if the voyage is customarily in stages to replenish the ship’s fuel.

TRANSPO.AB17511.SY19-20 23


8.11 Transshipment
Act of taking cargo out of one ship and loading it in another or transfer of goods from the vessel
stipulated in the contract of affreightment to another vessel before the place of destination named in the
contract has been reached or the transfer for further transportation from one ship or conveyance to
another.

Ownership in immaterial, but it concerns the actual physical transfer of cargo from one vessel to
another.

It is a violation of the contract and infringement in the right of the shipper and subjects the carrier
to liability if the freight is lost even by a cause otherwise excepted.

8.12 Duty to Inspect in Carriage of Sea
Common carrier is entitled to fair representation of the nature and value of the goods to be
carried, with the concomitant right to rely thereon. The carrier has no obligation to inquire into the
correctness or sufficiency of such information.

The carrier has right to know the character and may insist to inspect if they had reasonable
grounds to suspect that the offered goods are of dangerous or illegal character.

8.13 Insurance

SEC. 14. Compulsory Insurance Coverage for Passenger and Cargo. - To meet its financial responsibility
for any liability which a domestic ship operator may incur for any breach of the contract of carriage, every
domestic ship operator shall be required to submit annually the following;

(1) Adequate insurance coverage for each passenger in an amount to be computer in accordance
with existing laws, rules and regulations, and the total amount of such coverage shall be equivalent
to the total number of passenger accommodations being offered by the vessel;

(2) Adequate insurance coverage for cargo in an amount to be computed in accordance with existing
laws, rules and regulations, and the total amount of such coverage shall be equivalent to the total
cargo capacity being offered by the vessel; and

(3) If a domestic ship operator should offer both passenger and cargo service, then the total
insurance coverage shall be in the total sum equivalent to that stipulated in paragraphs (1) and (2)
of this section. Provided, That if a domestic ship operator should operate more than one (1) vessels,
the amount of insurance coverage required under this section, for purposes of providing financial
capacity, shall be the amount equivalent to the total number of passenger accommodations, or total
cargo capacity, or both, of the largest operating vessel which the domestic ship operator may have:
Provided, further, That the total insurance coverage which may be required of any domestic ship
operator shall not exceed the value of such vessel: Provided, finally, that adequate insurance
coverage shall be obtained from any duly licensed insurance company or international protection
and indemnity association.

SEC. 15. Other Insurance Coverage. - The MARINA shall have the power to require every ship operator to
obtain such other compulsory insurance coverage necessary to adequately cover claims for damages.

TRANSPO.AB17511.SY19-20 24

 • Marina Rules- A compulsory amount of 200k is imposed on operators, it is the operator who is
liable to pay if no insurance is obtained.

9. Extraordinary Diligence in Carriage by Land

Traffic is not the only problem, lives are often lost because of negligent operation and
maintenance of vehicles. Hence, extraordinary diligence is not only a duty but it is an imperative need.

9.1 Roadworthiness
Common carriers that offer transportation in land are required to make sure that the vehicles they
are using are in good order and condition.

Explosion of tires is not a fortuitous event but a mechanical defect, the common carriers are duty
bound to make sure that the parts are not defective.

9.2 Traffic Rules
The carrier fails to exercise extraordinary diligence if it will not comply with the basic traffic rules.
Art 2185 for the presumption of negligence to operate there must be violation of traffic rules, unlike Art
1756 all that is required is proof of death or injury to a passenger.

Presumption of negligence cannot be overcome if there is violation of any traffic rules.

9.3 Diligence in the Selection and Supervision
In quasi delict cases, the employer can invoke the defense of due diligence in the selection and
supervision of the employee in order to escape liability. Such is not available if the case against the carrier
is based on contract.

Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or
wilful acts of the former's employees, although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good
father of a family in the selection and supervision of their employees.
• the duty of the carrier to exercise extraordinary diligence includes due diligence in the selection
and supervision of the employee.It is only a part.
• Carrier may choose to hire its own employee or outsider, in either case, the common carrier is not
relieved of its liability under the contract of carriage.
• Common carriers are required to make sure that their drivers will not drive under the influence of
alcohol or dangerous drugs or other similar substance. Civil liability against the operator/ owner
of PUV.
• For a Certificate of Public Convenience for Public Utility Vehicles to be issued:
o PUV shall employ drivers who are of good moral
o Shall not employ a driver convicted of homicide, estafa, theft, serious physical injuries,
robbery unless approved by LTFRB
o With license and appropriate restriction code
o Drivers shall attend seminars conducted by LTFRB
o PUV shall subject them to orientation/ examination before hiring them and
o Must continuously conduct seminars/ trainings

TRANSPO.AB17511.SY19-20 25

 9.4 Duty to Inspect
No unbending duty to inspect each and every baggage that is being brought inside the bus or
jeepney unless there are grounds to conduct the inspection. As it is believed that passengers will not take
with him any dangerous things that might his injure his own and his co passengers.

9.5 Insurance
Insurance Code requires all motor vehicles to be covered by compulsory motor vehicle liability
insurance that compensates among others passengers who died or injured as a result of the operation of
the motor vehicle. Penalties are imposed on PUV operators if they fail to avail of insurance coverage with
the enhanced benefits.

10. Carriage by Train
Must exercise extraordinary diligence in performing its functions. It must keep the train coaches,
platform and other facilities and equipment in good order and safe condition.

10.1 Competent Employees
The carrier must hire competent engineers and employees as well as security personnel for the
operation, trains and facilities.

Train operator is liable for breach of contract if the negligence of the employee caused damage to
passengers even if the employees acted beyond his authority and that it is for his own interest.

10.2 The Platform must be safe
The duty is present even at the time the passenger is just still at the platform.

10.3 Maintenance of Train and Tracks
No matter what mode of transportation is the common carrier operating, the common carrier has
the duty to make sure that the vehicle or the means of transportation is in good and safe working
condition.

Common carrier cannot operate trains if the owner or operator knows or should know that the
operation will expose the public to an unsafe condition which is likely to result in personal injury or
property damage.
Must maintain its tracks or the operator will be liable if train was derailed because of defective
railroad.
10.4 Embarking and Disembarking of Passengers
Due care must be exercised when train passengers are embarking or disembarking. Extraordinary
diligence is required in the transportation of passengers while in the train, and also in giving intended
passengers reasonable opportunity to enter or disembark from it.

10.5 Negligence in the Operation of the Train
Extraordinary diligence must be exercised in the operation of the train. Hence, railroad company
may be held liable if the accident occurred because the train was running at an excessive speed.

10.6 Passengers who fell from the train
Civil case was allowed to prosper against respondent PNR although it is a government
instrumentality. The victim had to sit near the door of a coach as the train was overloaded.

10.7 Persons and Properties Ran Over by Train
TRANSPO.AB17511.SY19-20 26

 It is not the duty of the engineer to stop the train every time he sees a person on or near the tracks.
The engineer must give warning to make sure that he gets the attention of the pedestrian.

A person who is walking on the tracks must exercise due care in avoiding his own death and
injury. Hence, the driver can assume that all persons except children are aware of the danger to which
they are exposed and that they will take reasonable precautions to avoid accident and step out of the
danger.

10.8 Damage to Properties and Persons near Railroad Tracks
The railroad company must exercise due care in preventing damage to properties near the tracks.
It may be liable if its negligence caused the destruction of neighbouring properties through fire.

The carrier has an obligation to make reasonable inspections in order to discover and remedy
hazards and defects in pressurized tank cars carrying hazardous materials in urban areas.

11. Railroad Crossing Cases
Due diligence on the part of train operator includes due diligence in traversing railroad crossing
and in maintaining the same. It may be broadly stated that railroad companies owe to the public a duty of
exercising a reasonable degree of care to avoid injury to persons and property at railroad crossings,
which duties pertain both in the operation of trains and in the maintenance of the crossings.

Railway must construct safe crossing, with large signage to give notice of its proximity to the
public.

11.1 Absence of Safety Devices and Signs
Train operator may be held liable if it did not ensure safety of others through placing of crossbars,
signal lights warning signs, and other permanent safety barriers to prevent vehicles or pedestrians from
crossing there. Also, failure to operate such constitute negligence.

Railroad is not required to have a gate at every intersection but it is required to install such in
places necessary.

11.2 Speeding
Running the train at an excessive speed can be proof of negligence. It must regulate its speed with
proper regard for the safety of human life and property considering the surrounding circumstances
particularly the nature of locality.
11.3 Obligations of third persons approaching crossing
The general rule is that the rights and obligations between the public and a railroad company at a
public crossing are mutual and reciprocal. Both are under mutual obligation to exercise due care to avoid
causing or receiving injury. Each is in duty bound to exercise reasonable or ordinary care commensurate
with the risk and danger involved.

A railroad track is already a warning, a person is bound to use his senses, he must try to look and
listen first before crossing.

11.4 No Imputed Contributory Negligence
The negligence of driver of car that collided with a train as well as the negligence of the engineer
of the train cannot be imputed to the passengers of each vehicle.

TRANSPO.AB17511.SY19-20 27

 The negligence of the driver cannot be imputed to the passenger of the car. Imputed liability is
present only if 1. the driver is the employee of the passenger; 2. They are engaged in a joint enterprise; 3.
Occupant is under the care/control of the driver or has right to control acts of the driver

12. Passenger’s Baggages
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in his
personal custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be applicable.
12.1 Baggage Defined
To include whatever articles a passenger usually takes with him for his own personal use, comfort
and convenience according to the habits or wants of the particular class which he belongs, either with
reference to his immediate necessities or to the ultimate purpose of his journey.

LTFRB RULES: for issuance of certificate of Public Convenience
• every passenger is entitled to free 10kg and must pay the corresponding freightage for excess
weight
• when PUV carry both passenger and freight, the latter shall have its own compartment
• In case freight is carried on top of Public Utility buses, it must not exceed 20kilos per sqm of roof
area so it would not endanger the life of other passengers
• PUV shall not load any kind of animals except fowls but it must not sacrifice the convenience of
other passengers.

12.2 Checked-in Baggage
Baggage that are checked in are governed by the rules discussed above regarding carriage of
goods. The rules on goods being shipped is the applicable rule.

12.3 Hand Carried Luggage
Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary.
The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to
them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take
the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of
their effects. (1783)
Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury to the
personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well
as strangers; but not that which may proceed from any force majeure. The fact that travellers are
constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the
degree of care required of him. (1784a)
Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is
done with the use of arms or through an irresistible force. (n)
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family,
servants or visitors, or if the loss arises from the character of the things brought into the hotel. (n)
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is
not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest

TRANSPO.AB17511.SY19-20 28

whereby the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished
shall be void. (n)
• Art 1998, 2000-2003 imposed an additional duties but the duty to exercise extraordinary
diligence and presumption of negligence still applies even for hand carried luggage.
• The passenger is duty bound to:
1) to give notice to common carrier or its employees the effects brought by the passenger.
2) to take the precautions advised by the common carrier relative to the care and vigilance of their
effects.
Chapter 3: OBLIGATIONS OF THE PASSENGER AND SHIPPER
In contract of carriage, both the carrier and the passenger/shippers have prestations to perform.

1. Duty to Exercise Due Diligence
The passenger or shipper is bound by his contractual obligation. The shipper is bound to pay the
consideration in form of freight or fare. The passenger must likewise bound to exercise due diligence in
avoiding damage or injury.

1.1 Negligence of Shipper and Passenger
The shipper is obliged to exercise due diligence in avoiding damage to the goods that are being
shipped or injury to his person.

The carrier can not impute the negligence of its own employee to the person or entity that hired the
carrier.

2. Duty to Disclose
Due diligence includes the duty to disclose information relating to cargo so that the carrier can
exercise proper care and caution not only in relation to subject cargo but also the cargo of other shippers.

2.1 Damage Caused by Cargoes
Duty to disclose is important so proper care may be exerted towards the cargo. The shipper may be
held liable for any damage that may have been caused solely by the dangerous nature of the cargoes or
defect in the packaging of the cargoes.
3. Payment of Freight
Common carriers are subject to regulation as they are charging the public. The rate must be fair and
reasonable both on the consumer and investor. Consideration may be subject to the agreement of the
parties but it must not be beyond the maximum amount imposed by the appropriate government agency
like LTFRB.

3.1 Who will pay the freight
• The shipper may pay the freight before or at the time he delivers the goods to the carrier
for shipment.
• Parties may also stipulate that the consignee will pay the freight at the point of destination
( he is bound when he accept the goods)
• Consignor is primarily liable.
• Passengers are bound to pay the fare. Some requires payment before boarding or when the
passenger is already on board.

3.2 Time to pay the freight
TRANSPO.AB17511.SY19-20 29

 NCC does not provide for the period within which the payment of the freight charges should be
made. Code of Commerce provides in case of absence of any agreement:

Art 374: The consignees to whom the remittance may have been made can not defer the payment of the
expenses and transportation charges on the goods that they received after twenty-four hours have elapsed
from the time of the delivery; and in case of delay in making this payment, the carrier may request the
judicial sale of the goods he transported to a sufficient amount to cover the transportation charges and the
expenses incurred.
• Carriage of passengers by Sea: No Ticket, No boarding policy. The carrier shall inspect ticket one
hour upon departure so as to not disturb the passengers who are resting.
• If the vessel is not able to depart on time and such delay is unreasonable, the passenger may have
his ticket refunded without any refund service fee.
• A passenger who no longer wants to use or failed to board the vessel may refund or revalidate the
ticket. Revalidation is the accreditation of the ticket that is not used and intended to be used for
another voyage.
3.3 Carrier’s Lien
If consignee or consignor failed to pay the consideration for transportation of goods, the carrier
may exercise his lien in accordance with Code of Commerce, the 80 day period was modified into 30 day
peiod in Art 2241(9) of NCC.

Article 375:The goods transported shall be specifically obligated to answer for the transportation charges
and for the expenses and fees caused by the same during their transportations, or until the time of their
delivery.
This special right shall be limited to eight days after the delivery has been made, and after said prescription
the carrier shall have no further right of action than that corresponding to an ordinary creditor.
4. Timely Loading and Unloading
The shipper must make sure that goods are delivered on date, time and place agreed upon, failure to
do so may still require the shipper to pay. The shipper can not insist on tendering goods in excess of the
number agreed upon.

4.1 Demurrage
It is the compensation provided for in the contract of affreightment for the detention of the vessel
beyond the time agreed on for loading and unloading.
It is a claim for damages for failure to accept delivery.
Notice of arrival of vessels for purpose of unloading is often a condition precedent to the right to
collect demurrage charges.

5. Permits
Passenger or shipper may be required to secure permits for transportation of certain goods. Ex.
Animals, cars, aquatic products, hazardous material from Environmental Management Bureau.

6. Shipper’s Load and Count
It may be stipulated in the bill of lading that the shipper has the sole responsibility for the quantity,
description and condition of the cargoes shipped in container vans.

TRANSPO.AB17511.SY19-20 30

 The contents are not required to be checked by the carrier as such the carrier can not be held
responsible for any discrepancy if there would be differences in the description in bill of lading and actual
contents in the container.

7. Duties of Passenger
• The passenger must pay the fare
• Must present himself in the proper place
• Must present himself in the proper time
• Bring luggage not in excess of that allowed
• Must not bring prohibited materials/goods

7.1 Travel Documents
It is the obligation of the passenger and not the carrier to secure appropriate travel documents
such as Visa. Airline may be held liable if the loss of documents was due to the negligence of its employee.

7.2 Air Transportation of Passengers
Unacceptable conducts in the plane/ airline:
• interfere with crew members job
• must fasten seatbelt
• do act that will endanger the aircraft/ person/ property
• no smoking
• no person may secrete himself or secrete a cargo
• tampering of smoking detector


Week 4: Page 181-258

CHAPTER 4: DEFENSES OF THE COMMON CARRIER:
The carrier is not an insurer of the passengers’ safety or the safety of the goods that it is
transporting. His liability rests upon its failure to exercise extraordinary degree of diligence that the law
requires. The carrier may resort to defences provided under the NCC in order to escape liability but it has
burden of alleging or proving the facts that support the applicability of such defences.

1. Kind of Defenses
May either be total bar recovery or may mitigate its liability. Example of defences that may mitigate
his liability are Contributory Negligence, Avoidable Consequences Rule and a valid stipulation limiting
the liability. There are legal defences under the NCC, and there are certain defences expressly prohibited
under the NCC. A provision that common carrier need not exercise any degree of diligence is void.

2. Proximate Causation
The common carrier is presumed negligent the moment he fails to deliver the goods to its destination
or the moment the passenger did not reach his destination

It is by this reason that doctrine of proximate cause is inapplicable to contract of carriage.

2.1 Absence of Causation as a Defense

TRANSPO.AB17511.SY19-20 31

 The passenger or the shipper has no burden of proving that his injury was caused by the negligent or
intentional act of the common carrier. The carrier can prove that the proximate cause of the loss is not in
any act or omission of the said carrier because he exercised extraordinary diligence.

3. Defences in the carriage of goods

Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Additional (6) Exercise of extraordinary diligence

Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of
the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due
diligence to forestall or lessen the loss.

Article 1743. If through the order of public authority the goods are seized or destroyed, the common carrier
is not responsible, provided said public authority had power to issue the order.

3.1 Exclusivity of defences
No other defences may be raised by the common carrier in the carriage of goods. The enumeration
is exclusive.

3.2 Defenses in the carriage of passengers
The carrier’s defense is exercise of extraordinary diligence. The enumeration may be invoked
provided that utmost diligence is exercised.

4. Fortuitous event
For it to be a valid defense, the fortuitous event must be the proximate cause of the loss.

4.1 Requisites of fortuitous event
The requisites must be present before it can properly invoke as a defense:

1.) The cause of the unforeseen and unexpected occurrence, or failure of the debtor to comply with his
obligation, must be independent of the human will
2.) It must be impossible to foresee the event that constitutes the caso fortuito, or if it can be foreseen, it
must be impossible to avoid.
3.) The occurrence must be such as to render it impossible for the debtor to fulfil his obligation in a
normal manner.
4.) The debtor must be free from any participation in or aggravation of the injury resulting to the
creditor.

TRANSPO.AB17511.SY19-20 32

Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation,
or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which, though foreseen, were inevitable. (1105a)

Hence, fortuitous event may be produced by two general causes: 1. By nature, and 2) by acts of
man (armed invasion, attacks of bandits, governmental prohibition and robbery)

4.2 Effect of Carrier’s Participation

The carrier will be excused from liability if the natural disaster is the proximate and only cause of
the loss.

Article 1739. In order that the common carrier may be exempted from responsibility, the natural disaster
must have been the proximate and only cause of the loss. However, the common carrier must exercise due
diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural
disaster in order that the common carrier may be exempted from liability for the loss, destruction, or
deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the
public enemy referred to in article 1734, No. 2.

4.3 Rationale
The act of God which excuses the carrier must not only be the proximate cause but the better
opinion is that it must be the sole cause. And where the loss is cause by the act of God and the negligence
of the carrier mingles with it as an active and cooperative cause, he is still responsible.

4.4 Fire
It is not considered as a natural disaster or calamity.

4.5 Storm
PAGASA described a storm as having a wind force of 48 to 55 knots or 55 to 63 miles per hour.
Moonsoon wind is foreseeable but there are cases when a strong winds may be unforeseeable.



4.6 Hijacking
The common carrier is presumed to be at fault or to have acted negligently unless there is a proof
of extraordinary diligence on its part of the common carrier and that the thieves, or of robbers act with
grave or irresistible threat, violence or force.

4.7 Mechanical Defects
It is not a fortuitous event and carrier is liable to its passengers for damages caused by mechanical
defects of the conveyance. (faulty break, drag link spring). The passenger has no control over the
equipment unlike the carrier. The carrier has a remedy against the manufacturer for defective equipment
unlike the passenger. The passenger cannot directly sue the manufacturer because of absence of prvity
(Necesito v Paras), but may be sued directly under tort.

The SC seems to say that carrier can still claim that mechanical defects may be considered caso
fortuito if adequate inspection is made.

4.8 Tire blowouts
The rule on mechanical defects applies here.
TRANSPO.AB17511.SY19-20 33


4.9 Other invalid defences
The common carrier cannot likewise invoke explosion, presence of worm and rats, water damage
(where water gains entrance through a port that had been left open) and barratry (misconduct by
master/ crew of vessel against ship owner damaging the cargo).

5. Public Enemy
A defense available to the carrier not only under the civil code but also the carriage of goods by sea
act. The government itself is called upon to protect its subjects from loss from such hazard and private
citizens have no power to furnish the security and protection required.

The state against which the country is at war is the country of the carrier not the country of the
owner/ shipper of the goods.

War may be international or civil, foreign or domestic.

The common carrier to be exempted from liability when the act of public enemy must have been the
proximate and only cause of the los and that it must exercise due diligence to prevent or minimize loss
before, during and after the performance of the act of the public enemy.

6. Nature of Goods and Improper Packing
Carriage by Goods Sea Act provides that the carrier shall not be liable: (m) Wastage in bulk or weight or
any other loss or damage arising from inherent defect, quality, or vice of the goods; (n) Insufficiency or
packing; (o) Insufficiency or inadequacy of marks; chanrobles virtual law library; and (p) Latent defects
not discoverable by due diligence.

Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of
the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due
diligence to forestall or lessen the loss.

Defect is a want or absence of something necessary for completeness or perfection. It is not

synonymous with inferiority. Inferior means poor quality, mediocre or second rate.

If the carrier accepts the goods knowing the fact of improper packing of the goods upon ordinary
observation or notwithstanding such condition, it is not relieved of liability for loss or injury resulting
therefrom. The carrier must receive it under protest and must put a note in the bill of lading, if not then it
will be considered to be perfect upon acceptance.

The carrier would be liable if the damage to the packaging which resulted in the cargo’s unfitness for
transport was made when the same was in the custody of the carrier.

7. Order of Public Authority

Defense not available if:
1. Public authority has no authority to issue the subject order;
2. If public authority exceeded his authority

Article 1743. If through the order of public authority the goods are seized or destroyed, the common carrier
is not responsible, provided said public authority had power to issue the order.

TRANSPO.AB17511.SY19-20 34

 Carriage of Goods by Sea Act provides that neither the carrier nor the ship shall be responsible for
loss or damage resulting from arrest or restraint of prince, rulers or people or seizure under legal process
and from quarantine restrictions.

8. Defenses in Carriage of Passengers

The primary defense is that the carrier exercise extraordinary diligence in transporting passengers
even in case of fortuitous event or acts of third persons.

9. Acts of Employees
The carrier is liable for the acts of its employees, unlike in quasi delict the carrier can not escape liability
by claiming that he exercised extraordinary diligence in the selection and supervision of its employees.

Article 1759. Common carriers are liable for the death of or injuries to passengers through the negligence
or wilful acts of the former's employees, although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good
father of a family in the selection and supervision of their employees.

9.1 Passenger has no duty to inquire

The riding public is not required to inquire from time to time before they board the carrier
whether the driver is authorized to drive and is following the existing rules of management.

9.2 Rationale
Three reason why carrier is liable for the acts of its employees: (Maranan v Perez)

(1) the special undertaking of the carrier requires that it furnish its passenger that full measure of
protection afforded by the exercise of the high degree of care prescribed by the law, inter alia from violence
and insults at the hands of strangers and other passengers, but above all, from the acts of the carrier's own
servants charged with the passenger's safety;
(2) said liability of the carrier for the servant's violation of duty to passengers, is the result of the formers
confiding in the servant's hands the performance of his contract to safely transport the passenger,
delegating therewith the duty of protecting the passenger with the utmost care prescribed by law; and

(3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence of
the carrier's employees against passengers, since it, and not the passengers, has power to select and remove
them.

The carriers liability for assaults on passengers committed by its employees lies on either:

1. The doctrine of respondent superior (minority view): carrier is liable only when it acted within
the scope of its authority.

2. The principle that it is the carriers implied duty to transport the passengers safely (second
view): The carriers liability here is absolute whether or not within the scope of employees
authority. This view is the one followed in the Philippines.

9.3 Theft by employees
TRANSPO.AB17511.SY19-20 35

 Willful acts of the employees include theft. The Code of Commerce in force omits the declaration of
non liability contained in the Old Code and clearly makes the shipowner liable civilly for the loss suffered
by those who contracted with the captain in consequence of the misdemeanour and crimes committed by
the latter or by members of the crew.

10. Acts of other passenger and third persons
The availability of such defense is also subject to the exercise of a carrier of due diligence.

Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful
acts or negligence of other passengers or of strangers, if the common carrier's employees through the
exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

In other words, the negligence of the carrier need not be the sole cause of the damage or injury to
the passenger or the goods. The carrier would still be liable even if the contractual breach concurs with
the negligent act or omission of another person.

11. Acts of the shipper or the passenger

If the act or omission of the shipper or owner of the goods or the passenger is the proximate and only
cause of the damage, then the common carrier is not liable.

11.1 Contributory negligence of the shipper
Is conduct in the part of the injured party contributing as a legal cause to the harm he has suffered,
which falls below the standard to which he is required to conform for his own protection. It will only
mitigate the liability of the carrier and not totally absolve him.

Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the
goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.

11.2 Contributory negligence of the passenger
Passengers must observe due diligence to avoid injury.

Article 1761. The passenger must observe the diligence of a good father of a family to avoid injury to
himself.

Article 1762. The contributory negligence of the passenger does not bar recovery of damages for his death
or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of
damages shall be equitably reduced.

11.3 Causation
The negligence of the shipper or the passenger may be the proximate and only cause of the loss, in
which case, the carrier should not be made liable.

The carrier must prove that the only cause of the loss is any of the following acts of the shipper:
a. Failure of the shipper to disclose the nature of the goods
b. Improper marking or direction as to destination
c. Improper loading when he assumes such responsibility.

TRANSPO.AB17511.SY19-20 36

 11.4 Avoidable consequences
Even if the carrier is responsible for the loss or injury, the passenger is also required to lessen the
damage or injury under this doctrine of avoidable consequences.

11.5 Assumption of risk
Passengers must take such risks incident to the mode of travel. Example in air travel, adverse
weather condition or climate change are perils involved in air travel and passengers must assume or
expect. Carriers are not insurer of lives of their passengers.

There is no assumption of risk also by the mere fact that the carrier posted notices against such
liability.

11.6 Doctrine of last clear chance
When both parties involved in the accident were both negligent, the negligence of the party will not
be considered the proximate cause if the other party has the last clear chance of avoiding the injury. The
negligence of the plaintiff, which is not just a contributory negligence, will be considered and efficient
intervening cause.

12. Notice of claim
In action for damages due to breach of contract, it is essential that the claimant will establish the
following:

a. Existence of a perfected contract
b. The breach thereof by the contracting party
c. Damages sustained due to the breach.
It is also important that the mandatory formal requirements are complied with and that it must be filed
within the prescriptive period.

12.1 Claim in overland transportation and coastwise shipping
The condition precedent must be followed.

Article 366 Within the twenty-four hours following the receipt of the merchandise a claim may be brought
against the carrier on account of damage or average found therein on opening the packages, provided that
the indications of the damage or average giving rise to the claim can not be ascertained from the exterior of
said packages, in which case said claim would only be admitted on the receipt of the packages.
After the periods mentioned have elapsed, or after the transportation charges have been paid, no claim
whatsoever shall be admitted against the carrier with regard to the condition in which the goods
transported were delivered.
Under Article 366 of the Code of Commerce an action for damages is barred if the goods arrived in
damaged condition and the shipper files no claim within the following period:
a. The claim for damages must be filed immediately if the damage is apparent

b. The claim for damage must be made within 24 hours from receipt of the merchandise if the
damage is not apparent, damage cannot be ascertained merely from the outside packaging of the
cargo.

TRANSPO.AB17511.SY19-20 37

 Notice of claim is mandatory. The filing of a claim is a condition precedent to the accrual of a right of
action against a carrier for damages caused to the merchandise. If he fails to do so, no right of action can
accrue in his favour.
(Phone call is not construed as notice of claim)
Purpose. Is to give the carrier an opportunity to ascertain whether the claim is a well founded one
before the goods leave his hands. For him to investigate to safeguard itself from false and fraudulent
claims.
Commencement of Period. There must be delivery of the cargo by the carrier to the consignee at the
place of destination.
Applicable to coastwise shipping. Art 366 applies even to transportation by sea within the
Philippines or coastwise shipping.
Not applicable to Misdelivery. Article 366 applies only to those goods actually delivered. It has no
application to goods not delivered(since its claim for damages arises exclusively out of the failure to
make delivery.)
Effect of Stipulation. The period prescribed in Article 366 may be subject to modification by
agreement of the parties.
Waiver. The carrier may waive the requirement that there must be a notice of claim. It is deemed
waived if defendant failed to plead this defense in his answer and such can not be raised for the first time
on appeal.
Second paragraph of Article 366 is also a waiver. Payment by the shipper of the transportation
charges without protest knowing that there is damage, precludes the presentation of any claim against
the carrier.
If there is doubt. Although the notice of claim under Art 366 is complied with, there may be cases
when there is doubt regarding the condition of the goods.
Article 367: If there should occur doubts and disputes between the consignee and the carrier with regard to
the condition of goods transported at the time of their delivery to the former, the said goods shall be
examined by experts appointed by the parties, and a third one, in case of disagreement, appointed by the
judicial authority, the result of the examination being reduced to writing; and if the persons interested
should not agree to the report of the experts and could not settle their disputes, said judicial authority shall
order the deposits of the merchandise in a safe warehouse, and the parties interested shall make use of their
rights in the proper manner.
Provision in Article 367 for the prompt settlement of disputes as to the nature and extend of the
alleged damages and for final disposition of the damaged goods.

12.2 Notice of Claim in International Carriage of Goods By Sea
The provisions of the Carriage of Goods by Sea Act apply in international carriage (from foreign
country to the Philippines). Section 3 paragraph 6:

(6) Unless notice or loss or damage and the general nature of such loss or damage by given in writing to the
carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody of the
person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence

TRANSPO.AB17511.SY19-20 38

of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not
apparent, the notice must be given within three days of the delivery. chanrobles virtual law library
Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking
delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt been the
subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless
suit is brought within one year after delivery of the goods or the date when the goods should have been
delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided
for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods should have been delivered.
In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all
reasonable facilities to each other for inspecting and tallying the goods.
Period to file claim.
a. If the damage is apparent, the claim should be filed immediately upon discharge of the goods.
b. The claim must be made within 3 days from the delivery if the damage is not apparent.

Period is not mandatory. Failure to file notice of claim within the given period will not bar recovery.
Failure to file notice of claim is not a defense available to the common carrier. Regardless whether the
notice of loss or damage has been given, the shipper can still bring an action to recover said loss or
damage within 1 year after the delivery of the goods.

13. Prescription in Overland Transportation and Coastwise Shipping
There being no special rules, the general rule under the NCC on extinctive prescription applies.

Under NCC, the extinctive period is 6 years if there is no written contract (if no bill of lading) and ten
years if there is a written contract (if there is bill of lading). This rule applies to carriage of passengers for
domestic transportation.

13.1 Prescription in International Carriage of Goods
The action for damages under the COGSA for international carriage of goods must be files within a period
of one year from the discharge/ delivery of goods.

Who can invoke. The carrier, the shipper or the consignee or the legal holder of the bill may
nvoke the prescriptive period. May not be invoked by the arrastre operator.

Effect of Demand. The period is not suspended by an extra judicial demand. Article 1155 of the
NCC can not be applied because matters affecting transportation of goods by sea should be decided in as
short time as possible.

Conversion or Misdelivery. The provison applies to loss of the cargo and not to misdelivery. Lost
means it perishes, or goes out of commerce or disappears in such a way that its existence is unknown and
can not be recovered. The law applicable is 10 years if written contract or 4 years if it is quasi delict.

Delay. It is not the loss contemplated under COGSA. The applicable period is 10 years.
TRANSPO.AB17511.SY19-20 39


Collision cases. The rule applies here but the 1 year period starts not from the date of collision
but when the goods should have been delivered, had the cargoes been saved.

Extension by agreement. The 1 year period can be extended by agreement of parties.

13.2 Prescription and Subrogation
The insurer who is exercising its right of subrogation is also bound by the one year prescriptive
period. The insurer is pursuing a cause of action belonging to the shipper/ insured. Hence any defense
available to against the shipper is available against the insurer. But it does not apply to the claim against
the insurer for the insurance proceeds. The claim against the insurer for the insurance proceeds is based
on contract that prescribes in ten years.

14. Notice of claim and Prescription in Air Transportation
No specific requirement for a notice of claim under NCC for air transportation. The applicable rule is
Warsaw Convention.

14.1 Rules under the Warsaw Convention
The complaint or claim with the carrier must be filed within 3 days from receipt of the baggage and 7
days in case of goods.

In case of delay, 14 days after the baggage was placed at the disposal of the passenger.

The notice of claim is a condition precedent before a suit for enforcement.

The prescriptive period under Warsaw Convention is 2 years from date of arrival at the destination or
from the date the aircraft ought to have arrived or from the date on which the transportation stopped.

15. Limiting Stipulations
The carrier can invoke a partial defense in the form of limiting stipulation. The parties may expressly
stipulate a fixed amount that may be recovered by the shipper which requires that:
a. It is reasonable and just under the circumstances
b. It is fairly and freely agreed upon
Hence, as defense of carrier it will claim the his liability is not the full amount of claim but only up
to the maximum amount fixed in the contract.


Week 4: Chapter 5 Page 259-303

1. Concepts
A contract of carriage is not a formal contract. A bill of lading or ticket is not necessary for the
perfect\on of a contract of carriage. Thus the obligation of the carrier to exercise extraordinary diligence
in transporting goods or passengers is present even if the carrier does not issue a bill of lading or ticket.

CC: Article 354 In the absence of a bill of lading the respective claims of the parties shall be decided by the
legal proofs that each one may submit in support of his claims, in accordance with the general provisions
established in this Code for commercial contracts.
• However the primary governing law is NCC.
TRANSPO.AB17511.SY19-20 40

 • Electronic Commerce Act also allow electronic documents to be used in lieu of written documents
• The conditions for issuance of a Certificate of Public Convenience for PUV by LTFRB include that
operators shall issue tickets/ receipts to passengers for BIR. Not imposed on jeepney opeartors.

2. Definition
A bill of lading is a written acknowledgment, signed by the master of a vessel or other authorized
agent of the carrier that he has received the described goods from the shipper, to be transported on the
expressed terms, to the described place of destination, and to be delivered there to the designated
consignee or parties.

The term bill of lading comprehends all forms of transportation and not merely those issued for the
carriage of goods by sea. It is sometimes called shipping receipts, forwarders receipt and receipts for
transportation.

The designation is not material and neither its form. If it contains acknowledgment by the carrier of
the receipt of goods for transportation, it is in legal effect a bill of lading.

3. Kinds of Bills of Lading
a. Negotiable/ Non negotiable

b. Clean bill of Lading/ Foul Bill of Lading
• Clean Bill of Lading: does not contain any notation indicating any defect in the goods
• Foul Bill of Lading: one that contains notation

c. Spent Bill of Lading: the goods are delivered but the bill of lading was not returned

d. Through bill of lading: one issued by a carrier who is obliged to use the facilities of other
carriers as well as his own facilities for the purpose of transporting the goods from the city of
the seller to the city of the buyer, which bill of lading is honoured by the second and other
interested carriers who do not issue their own lading.

e. On Board Bill/ Received for Shipment Bill
• On board: is one which it is stated that the goods have been received on board the vessel which is
to carry the goods: good as it in its way.
• Received for shipment bill: is one which goods have been received for shipment with or without
specifying the vessel by which the goods are to be shipped. Issued when conditions are not normal
and insufficient shipping space.
f. Custody Bill of Lading: the goods are already received by the carrier but the vessel indicated
therein has not yet arrived in the port

g. Port Bill of Lading: the vessel indicated in the bill of lading that will transport the goods is
already in the port

4. Nature of Bill of Lading
It operates both as a 1) receipt- it recites the date, place of shipment, quantity, weight, dimensions,
quality, condition and value; as a 2) contract- it is the law between the parties who are bound by the
terms and conditions specifying the rights and obligations of the parties. A third characteristic may be
added 3) a document of title that makes it a symbol of the goods.

TRANSPO.AB17511.SY19-20 41


5. When Effective
A bill of lading usually becomes effective upon its delivery to and acceptance by the shipper. A shipper
who receives a bill of lading without objections after an opportunity to inspect it and permits the carrier
to act on it by proceeding with the shipment is presumed to have accepted it as correctly stating the
contract and assented to its terms in absence of fraud or mistake and he is estopped from denying that he
assented to it.

6. Bill of Lading as Contract
Bill of lading as receipt and as a document of title can only be applied to carriage of goods. The bill of
lading as contract can be applied to tickets issued to passengers.

6.01. Parties
The parties in the bill of lading are the shipper and the carrier. A consignee although not signatory
becomes a party to the Bill of Lading by reason of either:
a. The relationship of agency between the consignee and the shipper/ consignor
b. The unequivocal acceptance of the bill of lading delivered to the consignee with full knowledge of
its contents
c. Availment of the stipulation pour autrui (when the consignee, a third person, demands before the
carrier the fulfilment of the stipulation made by the consignor/ shipper in the consignee’s favour
specifically the delivery of the goods/ cargoes shipped.

The carrier owes an obligation to the consignee, hence the latter is a party. Hence, in the bill of
lading, the parties with rights and/ or obligations are the shipper, carrier and consignee.

6.02. Contract of adhesion
Almost all of the provisions in a contract have been drafted only by one party and the participation of the
other is to adhere there to or just to sign. Hence, certain guidelines in the determination of their validity
and enforceability have been formulated in order that justice and fair play characterize the relationship
of the contracting parties.

Article 24. In all contractual, property or other relations, when one of the parties is at a disadvantage on
account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the
courts must be vigilant for his protection.

The one who adheres to the contract is in reality free to reject it entirely, if he adheres, he gives his
consent (Ong Yiu v CA).
So the parties can not escape liability by adverting to the bill of lading as a contract of adhesion, if the bill
of lading is clear on its face.

6.03. Parol Evidence Rule
A bill of lading is covered by the parol evidence rule. Under this rule, the terms of a contract are rendered
conclusive upon the parties, and evidence aliunde is not admissible to vary or contradict a complete and
enforceable agreement embodied in a document subject to well defined exceptions.

When parties have reduced their agreement in writing, all their previous and contemporaneous
agreement on the matter are merged therein.

TRANSPO.AB17511.SY19-20 42

Evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary or
contradict or defeat a valid instrument. The mistake contemplated as an exception to the parol evidence
is one that is a mistake of fact mutual to the parties.

It must comply with procedural requirements on parol evidence. It can not be raised belatedly.

6.04. Bill of Lading as Evidence
A bill of lading is a contract and is the law between the parties so they are bound by the terms and
conditions provided it is not contrary to law, morals, good customs, public order and public policy.

a. Bill of Lading as legal evidence recognized in the Code of Commerce:

CC: Article 353 The legal basis of the contract between the shipper and the carrier shall be the bills of
lading, by the contents of which all disputes which may arise with regard to their execution and fulfillment
shall be decided without admission of other exceptions than forgery or material errors in the drafting
thereof.
After the contract has been complied with the bill of lading issued by the carrier shall be returned to him,
and by virtue of the exchange of this certificate for the article transported, the respective obligations and
actions shall be considered as canceled, unless in the same act the claims which the contracting parties
desired to reserve are reduced to writing, exception being made of the provisions of Article 366.
If in case of loss or for any other reason whatsoever, the consignee can not return upon receiving the
merchandise the bill of lading subscribed by the carrier, he shall give said carrier a receipt for the goods
delivered, this receipt producing the same effects as the return of the bill of lading.
b. Maritime commerce provides:
CC: Art 309 A bill of lading drawn up in accordance with the provisions of this title shall be proof as between
all those interested in the cargo and between the latter and the underwriters, proof to the contrary being
reserved by the latter.

c. Art 710 of Code of Commerce:
CC: Article 710: Should the bills of lading not agree, and there should not be observed any correction or
erasure in any of them, those possessed by the freighter or consignee signed by the captain shall be proof
against the captain or agent in favor of the consignee or freighter; and those possessed by the captain or
agent signed by the freighter shall be proof against the freighter or consignee in favor of the captain or
agent.
d. Carriage of Goods Sea Act provides that entries in the bill of lading are prima facie proof thereof.
e. Tickets and the bill of lading are best evidence of a valid contract. All elements are present such as:
consent, cause/ consideration (fee) and object (transportation).

6.05. Bill of Lading as Actionable Document
A bill of lading is an actionable document under the Rules of Court. The bill of lading must be properly
pleaded either as causes of action or defences; the genuineness and due execution of which are deemed
instituted unless specifically denied under oath by adverse party.

If the party fails to controvert its existence then it amounts to judicial admission which is conclusive.

6.06. Shipment Terms
TRANSPO.AB17511.SY19-20 43

 • They determine the point at which the risk of loss passes from seller to buyer.
• They determine what performance by the seller amounts to a tender which will put the buyer, if
he thereafter refuses to accept delivery in breach, and;
• They are used for quoting the price

FOB: (Free on board). The risk passes to the buyer at the FOB point. The seller still assumes risk until the
goods reach the point of destination.

FAS: (Free Alongside). Is a variant of FOB and is used for carriage by water. It means that the seller
relinquishes the risk the moment the goods are delivered alongside the vessel.

On board bill of lading: signifies the completion of the loading of the goods.

CIF: (Cost, Insurance, Freight) indicates that the price quoted by the seller includes the invoice price plus
insurance and freight. The insurance is payable to the buyer. Hence, buyer bears the risk of loss while
goods are in transit.

The buyer may decide to take his own insurance over the cargo so the shipment term is (CF or Cost and
Freight). However the risk of the seller is the same as in CIF.

• Article 1523: provides that delivery to the carrier is delivery to the buyer. Under this rule, the
ownership over the goods is transferred to the buyer upon delivery to the carrier. Hence the risk
generally falls on the buyer upon delivery to the carrier in accordance with the principle of res
perit domino. Parties may however stipulate that seller will retain the risk of loss even if goods are
already with the carrier (FOB)
• Article 1503: ownership over the goods are not transferred to the buyer even if goods are already
delivered to the carrier if bill of lading provides that goods are deliverable to the seller or his
agent.
• FOB/ CIF and etc merely gives rise to presumption as to the time when delivery to the buyer is
made. Proof to contrary may be presented to prove the real intent of the parties.
• INCOTERMS: International commercial Terms: are embodied in the rules published by the
International Chamber of Commerce and over which the latter has intellectual property rights.
There will be no confusion because the parties are using standard terms with fixed meanings.
7. Basic Stipulations
The Code of Commerce provides the basic contents of the bill of lading both for land transportation and
maritime commerce.

7.01. Overland Transportation: the formalities are:
CC: Article 350: The shipper as well as the carrier of merchandise and goods may mutually demand of each
other the issue of a bill of lading in which there shall be stated:
1. The name, surname, and domicile of the shipper.
2. The name, surname, and domicile of the carrier.
3. The name, surname and domicile of the person to whom or to whose order the goods are addressed,
or whether they are to be delivered to the bearer of the said bill.
4. A description of the goods, stating their generic character, their weight, and the external marks or
signs of the packages containing the same.
5. The cost of the transportation.
6. The date on which the shipment is made.

TRANSPO.AB17511.SY19-20 44

 7. The place of the delivery to the carrier.
8. The place and time at which the delivery is to be made to the consignee.
9. The damages to be paid by the carrier in case of delay, if any agreement is made on this point.

Article 351: In shipments made over railroads or by other enterprises which are subject to schedules or the
time fixed by regulations, it shall be sufficient that the bills of lading or declarations of shipment furnished
by the shipper refer, with regard to the rate, terms, and special conditions of the transportation, to the
schedules and regulations, the application of which is requested; and should no schedule be determined the
carrier must apply the rate of the merchandise paying the lowest, with the condition inherent thereto,
always including such statement or reference in the bill of lading delivered to the shipper.
Article 352: Bills of lading or tickets in the case of transportation of passengers may be different, one for
persons and another for baggage, but all of them shall contain the name of the carrier, the date of shipment,
the points of departure and arrival, the price, and with regard to baggage, the number and weight of the
packages, with any other indications which may be considered necessary in order to easily identify them.
7.02. Maritime Commerce: Art 706 of Code of Commerce provides for stipulations that must be
included in a bill of lading for maritime commerce. Articles 707 to 718 provide other rules that apply to
Bill of Lading in absence of Civil Code provisions.

Article 706 The captain and the freighter of the vessel are obliged to draft the bill of lading, in which there
shall be stated:
1. The name, registry, and tonnage of the vessel.
2. The name of the captain and his domicile.
3. The port of loading and that of unloading.
4. The name of the shipper.
5. The name of the consignee, if the bill of lading is issued to order.
6. The quantity, quality, number of packages, and marks of the merchandise.
7. The freight and the primage stipulated.

The bill of lading may be issued to bearer, to order, or in the name of a specific person, and must be signed
within twenty-four hours after the cargo has been received on board, the freighter being able to request the
unloading thereof at the expense of the captain should he not sign it, and in every case indemnity for the
losses and damages suffered thereby.

Article 707 Four true copies of the original bill of lading shall be made, all of which shall be signed by the
captain and by the freighter. Of these copies the freighter shall keep one and send another to the consignee;
the captain shall take two, one for himself and another for the agent.

There may, furthermore, be made as many copies of the bill of lading as may be considered necessary by the
persons interested; but when they are issued to order or to the bearer there shall be stated in all the copies,
be they either of the first four or of the subsequent ones, the destination of each one, stating whether it is for
the agent, for the captain, for the freighter, or for the consignee. If the copy sent to the latter should be
duplicated there must be stated in said duplicate this fact, and that it is not valid except in case of the loss of
the first one.

Article 708 The bills of lading issued to the bearer sent to the consignee shall be transferable by the actual
delivery of the instrument; and by virtue of an indorsement, those issued to order.

TRANSPO.AB17511.SY19-20 45

In either case, the person to whom the bill of lading is transferred shall acquire all the rights and actions of
the assignor or indorser with regard to the merchandise mentioned in the same.

Article 709 A bill of lading drawn up in accordance with the provisions of this title shall be proof as between
all those interested in the cargo and between the latter and the underwriters, proof to the contrary being
reserved by the latter.

Article 710 Should the bills of lading not agree, and there should not be observed any correction or erasure
in any of them, those possessed by the freighter or consignee signed by the captain shall be proof against the
captain or agent in favor of the consignee or freighter; and those possessed by the captain or agent signed by
the freighter shall be proof against the freighter or consignee in favor of the captain or agent.

Article 711 The legitimate holder of a bill of lading who does not present it to the captain of the vessel
before her unloading, obliging the latter thereby to unload it and place it in deposit, shall be liable for the
cost of warehousing and other expenses arising therefrom.

Article 712 The captain can not himself change the destination of merchandise. In admitting this change at
the instance of the freighter, he must first take up the bills of lading he may have issued, under the penalty of
being liable for the cargo to the legitimate holder of the same.

Article 713 If before delivering the cargo a new bill of lading should be demanded of the captain, it being
alleged that the previous ones are not presented on account of their loss or for any other sufficient cause, he
shall be obliged to issue it, provided security for the value of the cargo is given to his satisfaction; but
without changing the consignment and stating therein the circumstances prescribed in the last paragraph
of Article 707, when the bills of lading referred to therein are in question, under the penalty otherwise to be
liable for said cargo if not properly delivered through his fault.

Article 714 If before the vessel puts to sea the captain should die or should discontinue in his position
through any accident, the freighters shall have a right to demand of the new captain the ratification of the
first bills of lading, and the latter must do so, provided all the copies previously issued be presented or
returned to him, and it should appear from an examination of the cargo that they are correct.

The expenses arising from the examination of the cargo shall be defrayed by the agent, without prejudice to
the right of action of the latter against the first captain, if he ceased to be such through his own fault. Should
said examination not be made, it shall be understood that the new captain accepts the cargo as it appears
from the bills of lading issued.

Article 715 Bills of lading will give rise to a most summary action or to judicial compulsion, according to the
case, for the delivery of the cargo and the payment of the freightage and proper expenses.

Article 716 If several persons should present bills of lading issued to bearer or to order, indorsed in their
favor, demanding the same merchandise, the captain shall prefer in delivering the same, the person
presenting the copy first issued, with the exception of the case when the latter one was issued on account of
the loss of the first one, and if they are held by different persons.
In such case, as well as when only second or subsequent copies issued without this proof are presented, the
captain shall apply to the judge or court, so that he may order the deposit of the merchandise, and that
through him it may be delivered to the proper person.

TRANSPO.AB17511.SY19-20 46

Article 717 The delivery of the bill of lading shall effect the cancellation of all the provisional receipts of
prior date given by the captain or his subalterns for partial deliveries of the cargo which may have been
made.

Article 718 After the cargo has been delivered, the bills of lading which the captain signed shall be returned
to him, or at least the copy by reason of which the delivery is made, with the receipt for the merchandise
mentioned therein.
The delay on the part of the consignee shall make him liable for the damages which may be caused the
captain thereby.

• The Carriage of Goods by Sea Act likewise provides that after receiving the goods into his charge,
the carrier or the master or agent of the carrier shall on demand of the shipper issue to the
shipper of a bill of lading.

(a) The leading marks necessary for identification of the goods as the same are furnished in writing by
the shipper before the loading of such goods starts, provided such marks are stamped or otherwise
shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are
contained, in such a manner as should ordinarily remain legible until the end of the voyage.

(b) Either the number of packages or pieces, or the quantity or weight, as the case may be, as furnished
in writing by the shipper.

(c) The apparent order and condition of the goods: Provided, That no carrier, master, or agent of the
carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, or weight
which he has reasonable ground for suspecting not accurately to represent the goods actually
received, or which he has had no reasonable means of checking.

7.03. Electronic Documents: RA 8792 Electronic Commerce Act of 2000 now allows the issuance
of tickets in the form of electronic documents.

Section 25. Actions Related to Contracts of Carriage of Goods. - Without derogating from the provisions of
part two of this law, this chapter applies to any action in connection with, or in pursuance of, a contract of
carriage of goods, including but not limited to:

(a) (i) furnishing the marks, number, quantity or weight of goods;
(ii) stating or declaring the nature or value of goods;
(iii) issuing a receipt for goods;
(iv) confirming that goods have been loaded;
(b) (i) notifying a person of terms and conditions of the contract;
(ii) giving instructions to a carrier;
(c) (i) claiming delivery of goods;
(ii) authorizing release of goods;
(iii) giving notice of loss of, or damage to goods;
(d) giving any other notice or statement in connection with the performance of the contract;
(e) undertaking to deliver goods to a named person or a person authorized to claim delivery;
(f) granting, acquiring, renouncing, surrendering, transferring or negotiating rights in goods;
(g) acquiring or transferring rights and obligations under the contract.

TRANSPO.AB17511.SY19-20 47

Section 26. Transport Documents. - (1) Where the law requires that any action referred to contract of
carriage of goods be carried out in writing or by using a paper document, that requirement is met if the
action is carried out by using one or more data messages or electronic documents.

(2) Paragraph (1) applies whether the requirement there in is in the form of an obligation or
whether the law simply provides consequences for failing either to carry out the action in writing or
to use a paper document.

(3) If a right is to be granted to, or an obligation is to be acquired by, one person and no person, and
if the law requires that, in order to effect this, the right or obligation must be conveyed to that person
by the transfer, or use of, a paper document, that requirement is met if the right or obligation is
conveyed by using one or more electronic data messages or electronic documents unique;

(4) For the purposes of paragraph (3), the standard of reliability required shall be assessed in the
light of the purpose for which the right or obligation was conveyed and in the light of all the
circumstances, including any relevant agreement.

(5) Where one or more data messages are used to effect any action in subparagraphs (f) and (g) of
Section 25, no paper document used to effect any such action is valid unless the use of electronic data
message or electronic document has been terminated and replaced by the used of paper documents.
A paper document issued in these circumstances shall contain a statement of such termination. The
replacement of the electronic data messages or electronic documents by paper documents shall not
affect the rights or obligation of the parties involved.

(6) If a rule of laws is compulsorily applicable to a contract of carriage of goods which is in, or is
evidenced by, a paper document, that rule shall not be inapplicable to such a contract of carriage of
goods which is evidenced by one or more electronic data messages or electronic documents by reason
of the fact that the contract is evidenced by such electronic data messages or electronic documents
instead of by a paper document.

8. Prohibited and Limiting Stipulations
Three kinds of limiting stipulations have often been made in a bill of lading.
a. Exempting the carrier from any and all liability for loss or damage occasioned by its own
negligence. (Exculpatory Contracts)
b. Unqualified limitation of such liability to an agreed valuation.
c. Limiting the of the carrier to an agreed valuation unless the shipper declares a higher value
and pays a higher rate of freight.
• 1 and 2nd are invalid as they are contrary to public policy. The 3rd is valid and enforceable.
st

8.01. Prohibited Stipulations: Stipulations exempting the carrier from any and all liabilities.
Article 1745 provides for an additional invalid stipulations in carriage of goods:

Article 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a
family, or of a man of ordinary prudence in the vigilance over the movables transported;
TRANSPO.AB17511.SY19-20 48

 (5) That the common carrier shall not be responsible for the acts or omission of his or its employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on
account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the
contract of carriage.


8.02. Limiting Stipulations

Article 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner
if the common carrier refused to carry the goods unless the former agreed to such stipulation.

Article 1747. If the common carrier, without just cause, delays the transportation of the goods or changes
the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case
of the loss, destruction, or deterioration of the goods.

Article 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is
valid.

Article 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Article 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and
has been fairly and freely agreed upon.

8.03. Purpose of Limiting Stipulations
It is to protect the common carrier. It obliges the shipper/ consignee to notify the common carrier of the
amount that the latter may be liable for in case of loss of the goods.

Unscrupulous shippers may undervalue the goods in order to avail of the lower rate of freight and claim
the real value of the goods if these goods are damaged.

8.04. Presumption of Negligence
The presence of limiting stipulation does not remove the duty to exercise extraordinary diligence in the
transportation of goods. Presumption of negligence still applies despite the presence of a limiting
stipulation.

NCC Article 1752. Even when there is an agreement limiting the liability of the common carrier in the
vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their
loss, destruction or deterioration.

8.05. Stipulation Reducing Diligence: The parties cannot stipulate so as totally exempt the
carrier from exercising any degree of diligence whatsoever; and parties cannot stipulate that the common
carrier shall exercise diligence less than the diligence of a good father of a family.

It may less than the extraordinary diligence provided:
• That the stipulation be in writing signed by both parties
TRANSPO.AB17511.SY19-20 49

 • That the stipulation be supported by a valuable consideration other than the service rendered by
the common carrier; and
• The stipulation be reasonable, just and not contrary to law

a. Reduction of Diligence not allowed for passenger:
Article 1757. The responsibility of a common carrier for the safety of passengers as required in articles
1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements
on tickets, or otherwise.

8.06. Stipulations Fixing the Limit of Recovery
Article 1750: which involves a stipulation fixing the amount that may be recovered which requires that:

a. It is reasonable and just under the circumstances
b. It is fairly and freely agreed upon

Factors to consider:
The determination of whether the stipulation is just and reasonable would depend on the prevailing
circumstances. One of which is whether the carrier has a competitor.

Article 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof,
to which the contract refers shall be taken into consideration on the question of whether or not a stipulation
limiting the common carrier's liability is reasonable, just and in consonance with public policy.

The pecuniary liability of a common carrier may by contract be limited to a fixed amount. It is required,
however that the contract must be reasonable and just under the circumstances and has been fairly and
freely agreed upon.

8.07. Riots and Strikes
An agreement limiting the common carrier’s liability for delay on account of strikes and riots is valid. This
allows limiting the liability but not escape from liability. Provision relieving liability is valid provided that
extraordinary diligence is exercised in preventing or aggravation of damage or injury.

8.08. Carriage of Goods by Sea Act
It applies supletorily to the civil code if the goods are to be shipped from a foreign port to the Philippines.
Under COGSA, the liability of the carrier is S500 per package in absence of shippers declaration of a
higher value in a bill of lading. The condition is deemed part of the bill of lading even if not expressly
stated.

Package in COGSA: if goods are shipped in cartons, each carton is considered a package even if they are
stored in container vans.

8.09 When Limiting Stipulation cannot be invoked
a. when the agreement limiting the common carrier’s liability is annulled by the shipper or owner if
the common carrier refused to carry the goods unless the former agreed to such stipulation; and

b. if the carrier delays in the transportation of the goods
c. if the carrier changes the stipulated or usual route.

9. Bill of Lading as Receipt
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 The issuance of a bill of lading carries the presumption that the goods were delivered to the
carrier issuing the bill, for immediate shipment, and is nowhere questioned that a bill of lading is
prima facie evidence of the receipt of goods by the carrier.

It is competent and prima facie but not conclusive evidence of delivery to the carrier.

The carrier may be allowed to present proof that he received the cargo on a date different from
the date of the bill of lading.

Said Weight Clause: Nobody knows the actual weight of the cargo, the weight written on the bill
and on the manifest is based solely on the declaration of the shipper. Shipper is solely responsible
for the loading while the carrier is oblivious of the contents of the shipment.
10. Bill of Lading as Document Title
Such bill of lading can be a negotiable document of title.

Goods are locked up in the bill in the same way that the debt is merged in the instrument.

10.1 Negotiability
The presence of words of negotiability makes the document negotiable.

Article 1507. A document of title in which it is stated that the goods referred to therein will be delivered to
the bearer, or to the order of any person named in such document is a negotiable document of title. (n)

Effect of Stamp or Notation “ Non- negotiable”: the document remains to be negotiable even if the words
not negotiable or non negotiable are placed thereon.

Article 1510. If a document of title which contains an undertaking by a carrier, warehouseman or other
bailee to deliver the goods to bearer, to a specified person or order of a specified person or which contains
words of like import, has placed upon it the words "not negotiable," "non-negotiable" or the like, such
document may nevertheless be negotiated by the holder and is a negotiable document of title within the
meaning of this Title. But nothing in this Title contained shall be construed as limiting or defining the effect
upon the obligations of the carrier, warehouseman, or other bailee issuing a document of title or placing
thereon the words "not negotiable," "non-negotiable," or the like. (n)

10.2 How Negotiated

Depends on the type of document if it is bearer or order instrument.

CC Article 708 The bills of lading issued to the bearer sent to the consignee shall be transferable by the
actual delivery of the instrument; and by virtue of an indorsement, those issued to order.
In either case, the person to whom the bill of lading is transferred shall acquire all the rights and actions of
the assignor or indorser with regard to the merchandise mentioned in the same.
Bearer Document:
Article 1508. A negotiable document of title may be negotiated by delivery:
(1) Where by the terms of the document the carrier, warehouseman or other bailee issuing the
same undertakes to deliver the goods to the bearer; or

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 (2) Where by the terms of the document the carrier, warehouseman or other bailee issuing the
same undertakes to deliver the goods to the order of a specified person, and such person or a
subsequent indorsee of the document has indorsed it in blank or to the bearer.

Where by the terms of a negotiable document of title the goods are deliverable to bearer or where
a negotiable document of title has been indorsed in blank or to bearer, any holder may indorse the
same to himself or to any specified person, and in such case the document shall thereafter be
negotiated only by the indorsement of such indorsee. (n)

Article 1511. A document of title which is not in such form that it can be negotiated by delivery may be
transferred by the holder by delivery to a purchaser or done. xxx

Order Document: if it states that goods are to be delivered to the order of a person named therein. It can
only be negotiated through the indorsement of the specified person named therein.

Article 1509. A negotiable document of title may be negotiated by the indorsement of the person to whose
order the goods are by the terms of the document deliverable. Such indorsement may be in blank, to bearer
or to a specified person. If indorsed to a specified person, it may be again negotiated by the indorsement of
such person in blank, to bearer or to another specified person. Subsequent negotiations may be made in like
manner. (n)

Incomplete Negotiation: Transferee may also convert the plain transfer to negotiation by compelling
the transferor to complete the negotiation process.

Article 1515. Where a negotiable document of title is transferred for value by delivery, and the indorsement
of the transferor is essential for negotiation, the transferee acquires a right against the transferor to compel
him to indorse the document unless a contrary intention appears. The negotiation shall take effect as of the
time when the indorsement is actually made. (n)

10.3 Effects of Negotiation

Negotiability of a document merely indicated that the transfer of a document of title through negotiation
has the effect of transferring possession of the goods. Negotiation has effect of manual delivery so as to
constitute the transferee the owner of the goods.

Article 1513. A person to whom a negotiable document of title has been duly negotiated acquires thereby:

(1) Such title to the goods as the person negotiating the document to him had or had ability to convey to a
purchaser in good faith for value and also such title to the goods as the person to whose order the goods
were to be delivered by the terms of the document had or had ability to convey to a purchaser in good faith
for value; and

(2) The direct obligation of the bailee issuing the document to hold possession of the goods for him
according to the terms of the document as fully as if such bailee had contracted directly with him. (n)

Indorsee of negotiable bills of lading has the right to claim from the insurer for the loss of the goods. This
means that indorsees of a bill of land have the right to claim from the carrier for the loss of the goods and
the insurer who paid the loss can be subrogated to the same right.

-END-
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